Erie Company uses machine hours to apply standard overhead costs to production. The following data pertains...

 

Transcribed Image Text:

Erie Company uses machine hours to apply standard overhead costs to production. The following data pertains to October 2022: Master Budget Units Total machine hours (denominator value) Total variable overhead cost Total fixed overhead cost Required: = 2 Actual Results 2,500 2,250 100,000 96,000 $250,000 $265,000 $50,000 $54,000 1 Calculate the following overhead application rates: (2 marks) per machine hour per unit produced variable overhead fixed overhead 2 For each of the following variences, calculate the value of the variance and explain the cause (use dropdown for favor Variance F/U Cause a. variable overhead spending variance b. variable overhead efficiency variance c. fixed overhead production-volume variance 3 Will the fixed manufacturing overhead be overapplied, underapplied, or neither? Answer: What does this mean? How does this happen (cause)? (3 marks) Erie Company uses machine hours to apply standard overhead costs to production. The following data pertains to October 2022: Master Budget Units Total machine hours (denominator value) Total variable overhead cost Total fixed overhead cost Required: = 2 Actual Results 2,500 2,250 100,000 96,000 $250,000 $265,000 $50,000 $54,000 1 Calculate the following overhead application rates: (2 marks) per machine hour per unit produced variable overhead fixed overhead 2 For each of the following variences, calculate the value of the variance and explain the cause (use dropdown for favor Variance F/U Cause a. variable overhead spending variance b. variable overhead efficiency variance c. fixed overhead production-volume variance 3 Will the fixed manufacturing overhead be overapplied, underapplied, or neither? Answer: What does this mean? How does this happen (cause)? (3 marks)

Answer rating: 100% (QA)

SOLUTION 1 Overhead Application Rates a Per machine hour Total variable overhead cost Total machine hours 250000 96000 260 per machine hour b Per unit produced Total variable overhead cost Units 25000... View the full answer