Suncoast Company set the following standard costs per unit for its product. Direct materials (4.5 lbs....
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Suncoast Company set the following standard costs per unit for its product. Direct materials (4.5 lbs. @ $6 per lb.) Direct labor (1.5 hrs. @ $12 per hr.) Overhead (1.5 hrs. @ $16 per hr.) Standard cost per unit The standard overhead rate ($16 per direct labor hour) is based on a predicted activity level of 75% of the factory's capacity of 20,000 units per month. Following are the company's budgeted overhead costs per month at the 75% capacity level. Overhead Budget (75% Capacity) Variable overhead costs Indirect materials Indirect labor Power Maintenance Total variable overhead costs Fixed overhead costs Depreciation-Building Depreciation Machinery Taxes and insurance Supervisory salaries Total fixed overhead costs $27 18 24 $69 Total overhead costs $ 22,500 90,000 22,500 45,000 180,000 24,000 72,000 18,000 66,000 180,000 $360,000 The company incurred the following actual costs when it operated at 75% of capacity in December. Direct materials (69,000 lbs. @ $6.10 per lb.) Direct labor (22,800 hrs. @ $12.30 per hr.) Overhead costs Indirect materials Indirect labor Power Maintenance Depreciation Building Depreciation Machinery Taxes and insurance Supervisory salaries Total costs Required 1. Prepare flexible overhead budgets 75%, and 85% capacity levels. Check (1) Budgeted total overhead at 17,000 units, $384,000 $21,600 82,260 23,100 46,800 24,000 75,000 2. Compute the direct materials variance, including its price and quantity variances. 3. Compute the direct labor variance, including its rate and efficiency variances. 4. Prepare a detailed overhead variance report 16,500 66,000 $ 420,900 280,440 355,260 $1,056,600 for December showing amounts of each variable and fixed cost at the 65%, that shows the variances for individual items of overhead. Suncoast Company set the following standard costs per unit for its product. Direct materials (4.5 lbs. @ $6 per lb.) Direct labor (1.5 hrs. @ $12 per hr.) Overhead (1.5 hrs. @ $16 per hr.) Standard cost per unit The standard overhead rate ($16 per direct labor hour) is based on a predicted activity level of 75% of the factory's capacity of 20,000 units per month. Following are the company's budgeted overhead costs per month at the 75% capacity level. Overhead Budget (75% Capacity) Variable overhead costs Indirect materials Indirect labor Power Maintenance Total variable overhead costs Fixed overhead costs Depreciation-Building Depreciation Machinery Taxes and insurance Supervisory salaries Total fixed overhead costs $27 18 24 $69 Total overhead costs $ 22,500 90,000 22,500 45,000 180,000 24,000 72,000 18,000 66,000 180,000 $360,000 The company incurred the following actual costs when it operated at 75% of capacity in December. Direct materials (69,000 lbs. @ $6.10 per lb.) Direct labor (22,800 hrs. @ $12.30 per hr.) Overhead costs Indirect materials Indirect labor Power Maintenance Depreciation Building Depreciation Machinery Taxes and insurance Supervisory salaries Total costs Required 1. Prepare flexible overhead budgets 75%, and 85% capacity levels. Check (1) Budgeted total overhead at 17,000 units, $384,000 $21,600 82,260 23,100 46,800 24,000 75,000 2. Compute the direct materials variance, including its price and quantity variances. 3. Compute the direct labor variance, including its rate and efficiency variances. 4. Prepare a detailed overhead variance report 16,500 66,000 $ 420,900 280,440 355,260 $1,056,600 for December showing amounts of each variable and fixed cost at the 65%, that shows the variances for individual items of overhead.
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The flexible overhead budget is a budget that changes or flexes with changes in actual activity levels within a certain range It allows management to ... View the full answer
Related Book For
Fundamental accounting principle
ISBN: 978-0078025587
21st edition
Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta
Posted Date:
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