Walkenhorst Companys machining department prepared its 2022 budget based on the following data: Practical capacity ........................................................... 40,000
Question:
Walkenhorst Company’s machining department prepared its 2022 budget based on the following data:
Practical capacity ........................................................... 40,000 units
Standard machine hours per unit ............................................. 2
Standard variable factory overhead .................................. $3.00 per machine hour
Budgeted fixed factory overhead ................................... $360,000
The department uses machine hours to apply factory overhead to production. In 2022, the department used 85,000 machine hours and incurred $625,000 in total manufacturing overhead cost to manufacture 42,000 units. Actual fixed overhead cost for the year was $375,000.
Required
Determine for the year:
1. The fixed, variable, and total factory overhead application rates (per machine hour). Round all answers to 2 decimal places. For example, $3.451 = $3.45.
2. The total flexible budget, to the nearest whole dollar, for factory overhead cost based on output achieved in 2022.
3. The production volume variance, to the nearest whole dollar. State whether this variance was favorable (F) or unfavorable (U).
4. The total overhead spending variance, to the nearest whole dollar. State whether this variance was favorable (F) or unfavorable (U).
5. The overhead efficiency variance, to the nearest whole dollar. State whether this variance was favorable (F) or unfavorable (U).
6. The variable overhead spending variance and the fixed overhead spending variance, each to the nearest whole dollar. State whether each variance is favorable (F) or unfavorable (U).
Step by Step Answer: