Question

Lansing Mfg. prepared the following 2013 abbreviated flexible budget for different levels of machine hours:


Each product requires four hours of machine time, and the company expects to produce 10,000 units in 2013. Production is expected to be evenly distributed throughout the year.
a. Calculate separate predetermined variable and fixed OH rates using as the basis of application
(1) Units of production
(2) Machine hours.
b. Calculate the combined predetermined OH rate using
(1) Units of product
(2) Machine hours.
c. Assume that all actual overhead costs are equal to expected overhead costs in 2013, but that Lansing Mfg. produced 11,000 units of product. If the separate rates based on units of product calculated in (a) were used to apply overhead, what amounts of underapplied or overapplied variable and fixed overhead exist at year-end2013?


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  • CreatedJune 03, 2014
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