ACME manufacturing is a low-cost producer of a single, commodity product: RGL-01. Standard overhead cost information for one unit of this product is presented below: Standard number of machine hours per unit produced Standard variable overhead rate per machine hour Budgeted fixed overhead (for the year) Practical capacity, in units (annual basis) Budgeted output for the coming year, in units. Normal capacity, in units (per year). Actual production for the year (in units) Actual overhead costs incurred during the year: Fixed overhead Variable overhead Actual number of machine hours per unit for work done this period 1. Fixed overhead application rate 2. Total overhead application rate 3. Total overhead variance for the year Budgeted Output Required: 1. Calculate the fixed overhead application rate per machine hour using (a) budgeted output, (b) normal capacity, and (c) practical capacity. (Round your answers to 2 decimal places.) 2. What is the total overhead application rate per machine hour for each of the three choices identified in requirement 1? (Round your answers to 2 decimal places.) 3. What is the total overhead variance for the year when the overhead application rate per machine hour is determined under each of the following options: (a) budgeted output, (b) normal capacity, and (c) practical capacity? Indicate whether each variance is favorable (F) or unfavorable (U). (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) per machine hour per machine hour Normal Capacity 0.5 $ 30.00 $ 500,000 10,000 8,000 9,000 9,200 $ 480,000 $ 146,600 0.49 per machine hour per machine hour Practical Capacity per machine hour per machine hour
ACME manufacturing is a low-cost producer of a single, commodity product: RGL-01. Standard overhead cost information for one unit of this product is presented below: Standard number of machine hours per unit produced Standard variable overhead rate per machine hour Budgeted fixed overhead (for the year) Practical capacity, in units (annual basis) Budgeted output for the coming year, in units. Normal capacity, in units (per year). Actual production for the year (in units) Actual overhead costs incurred during the year: Fixed overhead Variable overhead Actual number of machine hours per unit for work done this period 1. Fixed overhead application rate 2. Total overhead application rate 3. Total overhead variance for the year Budgeted Output Required: 1. Calculate the fixed overhead application rate per machine hour using (a) budgeted output, (b) normal capacity, and (c) practical capacity. (Round your answers to 2 decimal places.) 2. What is the total overhead application rate per machine hour for each of the three choices identified in requirement 1? (Round your answers to 2 decimal places.) 3. What is the total overhead variance for the year when the overhead application rate per machine hour is determined under each of the following options: (a) budgeted output, (b) normal capacity, and (c) practical capacity? Indicate whether each variance is favorable (F) or unfavorable (U). (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) per machine hour per machine hour Normal Capacity 0.5 $ 30.00 $ 500,000 10,000 8,000 9,000 9,200 $ 480,000 $ 146,600 0.49 per machine hour per machine hour Practical Capacity per machine hour per machine hour
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter18: Activity-based Costing
Section: Chapter Questions
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:ACME manufacturing is a low-cost producer of a single, commodity product: RGL-01. Standard overhead cost information
for one unit of this product is presented below:
Standard number of machine hours per unit produced
Standard variable overhead rate per machine hour
Budgeted fixed overhead (for the year)
Practical capacity, in units (annual basis)
Budgeted output for the coming year, in units
Normal capacity, in units (per year)
Actual production for the year (in units)
Actual overhead costs incurred during the year:
Fixed overhead
Variable overhead
Actual number of machine hours per unit for work done this period
1. Fixed overhead application rate
2. Total overhead application rate
3. Total overhead variance for the year
Required:
1. Calculate the fixed overhead application rate per machine hour using (a) budgeted output, (b) normal capacity, and (c) practical
capacity. (Round your answers to 2 decimal places.)
2. What is the total overhead application rate per machine hour for each of the three choices identified in requirement 1? (Round your
answers to 2 decimal places.)
3. What is the total overhead variance for the year when the overhead application rate per machine hour is determined under each of
the following options: (a) budgeted output, (b) normal capacity, and (c) practical capacity? Indicate whether each variance is favorable
(F) or unfavorable (U). (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)
Budgeted Output
per machine hour
per machine hour
0.5
$ 30.00
$ 500,000
10,000
8,000
9,000
9,200
Normal Capacity
$ 480,000
$ 146,600
0.49
per machine hour
per machine hour
Practical Capacity
per machine hour
per machine hour
![Required information [The following information applies to the questions displayed below.] ACME manufacturing is a low-cost producer of a single, commodity product: RGL-01. Standard
overhead cost information for one unit of this product is presented below: Required: 1. Calculate the fixed overhead application rate per machine hour using (a) budgeted output, (b)
normal capacity, and (c) practical capacity. (Round your answers to 2 decimal places.) 2. What is the total overhead application rate per machine hour for each of the three choices identified
in requirement 1 ? (Round your answers to 2 decimal places.) 3. What is the total overhead varlance for the year when the overhead application rate per machine hour is determined under
each of the following options: (a) budgeted output, (b) normal capacity, and (c) practical capacity? Indicate whether each variance is favorable (F) or unfavorable (U), (Do not round
intermediate calculations. Round your answers to the nearest whole dollar amount.) ACME manufacturing is a low-cost producer of a single, commodity product: RGL-01. Standard
overhead cost information for one unit of this product is presented below: Standard number of machine hours per unit produced standard variable overhead rate per machine hour Budgeted
fixed overhead (for the year) Practical capacity, in units (annual basis) Budgeted output for the coming year, in units Normal capacity, in units (per year) Actual production for the year (in
units) Actual overhead costs incurred during the year: Fixed overhead Variable overhead Actual number of machine hours per unit for work done this period Required: Calculate the fixed
overhead application rate per machine hour using (a) budgeted output, (b) normal capacity, and (c) practical capacity. (Round your answers to 2 decimal places.) What is the total overhead
application rate per machine hour for each of the three choices identified in requirement 1 ? (Round your answers to 2 decimal places.) What is the total overhead variance for the year when
the overhead application rate per machine hour is determined under each of the following options: (a) budgeted output, (b) normal capacity, and (c) practical capacity? Indicate whether
each variance is favorable (F) or unfavorable (U). (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F79b22699-d2c4-4280-b29c-fa3a8d300e0a%2Ffc1b262d-b862-4af2-9b06-9ae73d8c9169%2Fh4h26c2_processed.png&w=3840&q=75)
Transcribed Image Text:Required information [The following information applies to the questions displayed below.] ACME manufacturing is a low-cost producer of a single, commodity product: RGL-01. Standard
overhead cost information for one unit of this product is presented below: Required: 1. Calculate the fixed overhead application rate per machine hour using (a) budgeted output, (b)
normal capacity, and (c) practical capacity. (Round your answers to 2 decimal places.) 2. What is the total overhead application rate per machine hour for each of the three choices identified
in requirement 1 ? (Round your answers to 2 decimal places.) 3. What is the total overhead varlance for the year when the overhead application rate per machine hour is determined under
each of the following options: (a) budgeted output, (b) normal capacity, and (c) practical capacity? Indicate whether each variance is favorable (F) or unfavorable (U), (Do not round
intermediate calculations. Round your answers to the nearest whole dollar amount.) ACME manufacturing is a low-cost producer of a single, commodity product: RGL-01. Standard
overhead cost information for one unit of this product is presented below: Standard number of machine hours per unit produced standard variable overhead rate per machine hour Budgeted
fixed overhead (for the year) Practical capacity, in units (annual basis) Budgeted output for the coming year, in units Normal capacity, in units (per year) Actual production for the year (in
units) Actual overhead costs incurred during the year: Fixed overhead Variable overhead Actual number of machine hours per unit for work done this period Required: Calculate the fixed
overhead application rate per machine hour using (a) budgeted output, (b) normal capacity, and (c) practical capacity. (Round your answers to 2 decimal places.) What is the total overhead
application rate per machine hour for each of the three choices identified in requirement 1 ? (Round your answers to 2 decimal places.) What is the total overhead variance for the year when
the overhead application rate per machine hour is determined under each of the following options: (a) budgeted output, (b) normal capacity, and (c) practical capacity? Indicate whether
each variance is favorable (F) or unfavorable (U). (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)
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