Warner Manufacturing Has Established the Following Master Flexible Budget for the Current

Essay

Warner Manufacturing has established the following master flexible budget for the current year:
$\begin{array}{r}\text { Production in Units }\\ \begin{array}{|l|r|r|r|}\hline & \underline{80,000} & \underline{120,000} & \underline{160,000} \\\hline \text { Variable expenses: } & & & \\\hline \text { Raw materials } & \$ 152,000 & 228,000 & 304,000 \\\hline \text { Direct labour } & 160,000 & 240,000 & 320,000 \\\hline \text { Manufacturing overhead } & \underline{120,00} & \underline{180,00} & \underline{240,000} \\\hline \text { Total variable expenses } & \$ 432,000 & \$ 648,000 & \$ 864,000 \\\hline\\\hline \text { Fixed expenses: } & & & \\\hline \text { Manufacturing overhead } & \$ 300,000 & \$ 300,000 & \$ 300,000 \\\hline \text { Selling and administrative } & \underline{192,000} & \underline{192,000} & \underline{192,000} \\\hline \text { Total fixed expenses } & \$ 492,000 & \$ 492,000 & \$ 492,000 \\\hline & & & \\\hline \text { Total expenses } & \$ 924,000 & \$ 1,140,000 & \$ 1,356,000 \\\hline \end{array}\end{array}$

Manufacturing overhead is applied on the basis of machine hours.At standard,each unit of product requires one machine hour to complete.
Required:
a)The denominator activity level is 120,000 units.What are the predetermined variable and fixed manufacturing overhead rates?
b)Actual data for the year were as follows:
$$\begin{array} { | l | r | } \hline \text { Answer: } & \$ 159,500 \\ \text { Actual variable manufacturing overhead cost } & \\\hline \text { Actual fixed manfacturing overhead cost } & \$ 305,000 \\\hline \text { Actual machine hours incurred } & 110,000 \\\hline \text { Units produced } & 105,000 \\\hline\end{array}$$