Question

Mobile Manufacturing Inc. manufactures a small electric motor that is a replacement part for the more popular gas furnaces. The standard cost card shows the product requirements as follows:
Direct materials—2 lb @ $4 per lb . . . . . . . . . . . . . . . . . . . . $ 8.00
Direct labor—5 hr @ $8 per hr. . . . . . . . . . . . . . . . . . . . . . . 40.00
Factory overhead:
Variable cost—5 hr @ $2 per hr . . . . . . . . . . . . . . . . . . . . 10.00
Fixed cost—5 hr @ $4 per hr . . . . . . . . . . . . . . . . . . . . . . 20.00
Total standard cost per unit. . . . . . . . . . . . . . . . . . . . . . $78.00
Factory overhead rates are based on normal 100% capacity and the following flexible budgets:
The company produced 3,500 units, using 18,375 direct labor hours and incurring the following overhead costs:
Factory overhead—fixed . . . . . . . . . . . . . . . . . . . . . . . . . . . $61,950
Factory overhead—variable . . . . . . . . . . . . . . . . . . . . . . . . . $33,710
Required:
1. Calculate the factory overhead: variable-spending, variable efficiency, fixed-spending, and production-volume variances.
2. Does the net variance represent under- or overapplied factory overhead?


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  • CreatedMarch 31, 2015
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