Newark Plastics Corporation developed its overhead application rate from the annual budget. The budget is based on an expected total output of 624,000 units requiring 3,120,000 machine hours. The company is able to schedule production uniformly throughout the year. Machine hours is the cost driver for overhead costs.

A total of 62,400 units requiring 265,200 machine hours were produced during May. Actual overhead costs for May amounted to $534,400. The actual costs, as compared to the annual budget and to one-twelfth of the annual budget, are as follows:

  

NEWARK PLASTICS CORPORATION Annual Budget
	Total Amount				Per Unit				Per Machine Hour				Monthly Budget				Actual Costs for May
Variable overhead:
Indirect material	$	1,684,800			$	2.70			$	0.54			$	140,400			$	158,400
Indirect labor		1,060,800				1.70				0.34				88,400				88,400
Fixed overhead:
Supervision		873,600				1.40				0.28				72,800				66,800
Utilities		811,200				1.30				0.26				67,600				85,600
Depreciation		1,622,400				2.60				0.52				135,200				135,200
Total	$	6,052,800			$	9.70			$	1.94			$	504,400			$	534,400

  

Required:

1. Prepare a schedule showing the following amounts for Newark Plastics for May.

1. a. Applied overhead costs.

2. b. Variable-overhead spending variance.

3. c. Fixed-overhead budget variance.

4. d. Variable-overhead efficiency variance.

5. e. Fixed-overhead volume variance.

Answer rating: 100% (QA)

a Applied overhead costs Actual units of production 62400 Per unit cost 970 Applied overhead costs 6... View the full answer