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    Overhead Variances Solution

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    yacapinburgos
    Sebastian Company uses a standard costing system to value inventory with standard manufacturing overhead costs of $60 per switch for variable overhead and $75 per switch for fixed overhead. In December, 46,000 switches were produced compared to a budget of 40,000 switches. Actual variable overhead was $50,000 unfavorable to standard and fixed overhead was $450,000 unfavorable due to higher production volume.

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    Overhead Variances Solution

    Uploaded by

    yacapinburgos
    2K views2 pages
    Sebastian Company uses a standard costing system to value inventory with standard manufacturing overhead costs of $60 per switch for variable overhead and $75 per switch for fixed overhead. In December, 46,000 switches were produced compared to a budget of 40,000 switches. Actual variable overhead was $50,000 unfavorable to standard and fixed overhead was $450,000 unfavorable due to higher production volume.

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    Sebastian Company uses a standard costing system to value inventory with standard manufacturing overhead costs of $60 per switch for variable overhead and $75 per switch for fixed overhead. In December, 46,000 switches were produced compared to a budget of 40,000 switches. Actual variable overhead was $50,000 unfavorable to standard and fixed overhead was $450,000 unfavorable due to higher production volume.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    2K views2 pages

    Overhead Variances Solution

    Uploaded by

    yacapinburgos
    Sebastian Company uses a standard costing system to value inventory with standard manufacturing overhead costs of $60 per switch for variable overhead and $75 per switch for fixed overhead. In December, 46,000 switches were produced compared to a budget of 40,000 switches. Actual variable overhead was $50,000 unfavorable to standard and fixed overhead was $450,000 unfavorable due to higher production volume.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
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    OVERHEAD VARIANCES

    Sebastian Company, which manufactures electrical switches, uses a standard cost system and carries all inventories at standard. The standard manufacturing overhead costs per switch are based on direct labor hours and are shown below: Variable overhead (5 hours @ $12 per direct manufacturing labor hour) Fixed overhead (5 hours @ $15* per direct manufacturing labor hour) Total overhead per switch *Based on capacity of 200,000 direct manufacturing labor hours per month. The following information is available for the month of December: $ 60 75 $135

    46,000 switches were produced although 40,000 switches were scheduled to be produced. 225,000 direct manufacturing labor hours were worked at a total cost of $5,625,000. Variable manufacturing overhead costs were $2,750,000. Fixed manufacturing overhead costs were $3,050,000.
    1. The variable overhead rate variance for December was a. $50,000 U. 2. b. $350,000 U. c. $10,000 F. d. $60,000 F.

    The variable manufacturing overhead efficiency variance for December was a. $50,000 U. b. $350,000 U. c. $10,000 F. d. $60,000 F.

    3.

    The fixed manufacturing overhead budget variance for December was a. $450,000 F. b. $400,000 F. c. $50,000 U. d. $775,000 F.

    4.

    The fixed overhead production volume variance for December was a. $450,000 F. b. $400,000 F. c. $50,000 U. d. $775,000 F.

    solutions: 1.&2. (225,000x$12.22) (225,000 x $12) $2,750,000 $2,700,000 $50,000 U 3.&4. (5 x 40,000) (200,000 x $15) $3,050,000 $50,000 U $3,000,000

    (230,000 x $12) $2,760,000 $60,000 F (5 x 46,000) (230,000 x $15) $3,450,000 $450,000 F

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