Sucher Company Uses a Standard Cost System in Which Manufacturing

Essay

Sucher Company uses a standard cost system in which manufacturing overhead costs are applied to units of product on the basis of machine hours.The company's condensed flexible budget for manufacturing overhead is given below:

$\begin{array}{l}\begin{array}{lll}\\ \\ \\\text { Variable overhead costs } \\\text { Fixed overhead costs }\\\text { Total overhead costs } \end{array}\begin{array}{ccc}\text { Per }&&\text { Machine Hours }\\ \text { Machine Hours } &20,000&25,000&30,000\\\\\$3&\$ 60,000 & \$ 75,000 & \$ 90,000 \\&300,000 &300,000 & 300,000\\&\$ 360,000&\$ 375,000&\$ 390,000\end{array}\end{array}$

The denominator level of activity is 30,000 machine hours. Standards call for 2.5 machine hours per unit of output. Actual activity and manufacturing overhead costs for the year are given below:

$\begin{array} { l r } \text { Units produced } & 12,800 \text { units } \\\text { Machine hours used } & 31,600 \text { machine hours } \\\text { Overhead costs incurred: } & \\\text { Variable costs } & \$ 96,000 \\\text { Fixed costs }&\$ 297,000\end{array}$

Required:

a) What are the standard hours allowed for the output?
b) What was the variable overhead spending variance?
c) What was the variable overhead efficiency variance?
d) What was the fixed overhead budget variance?
e) What was the fixed overhead volume variance?
f) (Appendix 10B) Prepare a journal entry to record the variable overhead costs incurred and applied, including the results of the variance analysis.
g) (Appendix 10B) Prepare a journal entry to record the fixed overhead costs incurred and applied, including the results of the variance analysis.