Question

The Mongolia division of a Canadian telecommunications company uses standard costing for its machine- paced production of telephone equipment. Data regarding production during June are:
Variable manufacturing overhead costs incurred..... $ 541,690
Variable manufacturing overhead cost rate....... $ 7 per standard machine- hour
Fixed manufacturing overhead costs incurred..... $ 146,300
Fixed manufacturing overhead costs budgeted..... $ 138,000
Denominator level in machine- hours........ 69,000
Standard machine- hour allowed per unit of output... 1.2
Units of output ................. 65,100
Actual machine- hours used ............. 76,300
Ending work- in- process inventory ......... 0

Required
1. Prepare an analysis of all manufacturing overhead variances. Use the variance analysis framework illustrated in Exhibit 13- 6 (page 559).
2. Describe how individual variable manufacturing overhead items are controlled from day to day.
3. Discuss possible causes of the variable manufacturing overhead variances.



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  • CreatedJanuary 15, 2015
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