Question

The condensed form of Nordstrop Company’s flexible budget for manufacturing overhead follows:
The following information is available for a recent period:
a. The denominator activity of 8,000 machine-hours was chosen to compute the predetermined overhead rate.
b. At the 8,000 standard machine-hours level of activity, the company should produce 3,200 units of product.
c. The company’s actual operating results were as follows:
Number of units produced . . . . . . . . . . . . . . . . . . . 3,500
Actual machine-hours. . . . . . . . . . . . . . . . . . . . . . . . 8,500
Actual variable overhead costs . . . . . . . . . . . . . . . $9,860
Actual fixed overhead costs . . . . . . . . . . . . . . . . . . $25,100
Required:
1. Compute the predetermined overhead rate and break it down into variable and fixed cost elements.
2. What were the standard hours allowed for the year’s actual output?
3. Compute the variable overhead spending and efficiency variances and the fixed overhead budget and volume variances.


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  • CreatedJuly 08, 2015
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