Littleton Manufacturing Uses a Standard Cost System in Which Manufacturing

Essay

Littleton Manufacturing uses a standard cost system in which manufacturing overhead is applied to units of product on the basis of standard machine-hours. At standard, each unit of product requires one machine-hour to complete. The standard variable overhead is $1.80 per machine-hour and $432,000 per year. The denominator level of activity is 120,000 machine-hours, or 120,000 units. Actual data for the year were as follows: Required:
a. What are the predetermined variable and fixed manufacturing overhead rates?
b. Compute the variable overhead rate and efficiency variances.
c. Compute the fixed manufacturing overhead budget and volume variances.