Question

Engines Unlimited manufactures motorcycle engines and uses flexible budgeting and ABC. The company’s budget for variable overhead is $30,000 and the budget for fixed overhead is $24,000. When the company analyzes overhead using ABC, the budgeted overhead of $54,000 is traced to three activities: assembly, finishing, and inspection. The costs associated with each activity and their respective cost drivers are as follows:


The actual cost and total volume for each activity are as follows:


Required
A. Compute the overhead application rate for each activity.
B. Using the actual volume and cost, compute the spending variance, the efficiency variance, and the total variance for eachactivity.


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  • CreatedMarch 11, 2015
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