For 2013, Riguilio Inc. set predetermined variable and fixed overhead rates, respectively, at $ 6.50 and $
Question:
For 2013, Riguilio Inc. set predetermined variable and fixed overhead rates, respectively, at $ 6.50 and $ 9.35 based on an expected monthly capacity of 4,000 machine hours. Each unit of product requires 1.25 machine hours. During August 2013, the company produced 3,360 units and incurred $ 27,000 of variable overhead costs and $ 41,400 of fixed overhead costs. The firm used 4,100 machine hours during August 2013.
a. Using separate overhead rates, calculate overhead variances using the four-variance approach.
b. Using a combined overhead rate, calculate variances using the three-variance approach.
c. Using a combined overhead rate, calculate variances using the two-variance approach.
d. Using a combined overhead rate, calculate variances using the one-variance approach.
Step by Step Answer:
Cost Accounting Foundations and Evolutions
ISBN: 978-1111971724
9th edition
Authors: Michael R. Kinney, Cecily A. Raiborn