Alexandria Corporation Applies Fixed Manufacturing Overhead to Production on the Basis

Essay

Alexandria Corporation applies fixed manufacturing overhead to production on the basis of machine hours worked. The following data relate to the month just ended:
Actual fixed overhead incurred: $1,245,000
Budgeted fixed overhead: $1,200,000
Anticipated machine hours: 240,000
Standard machine hours per finished unit: 8
Actual finished units completed: 31,250
Required:
A. Compute Alexandria's standard fixed-overhead rate per machine hour.
B. Determine Alexandria's fixed-overhead budget variance and fixed-overhead volume variance.
C. Calculate the amount of fixed overhead applied to production.
D. Consider the two events that follow and determine whether the event will affect the fixed-overhead budget variance, the fixed-overhead volume variance, both variances, or neither variance. Assume that Alexandria has not yet revised its standards to reflect these events if a revision is warranted.
1. A raw material shortage halted production for two days.
2. An additional assembly-line supervisor was hired at the beginning of the month.