Question

The Ramirez Company uses standard costing in its manufacturing plant for auto parts. The standard cost of a particular auto part, based on a denominator level of 4,100 output units per year, included 5 machine- hours of variable manufacturing overhead at $ 7 per hour and 5 machine- hours of fixed manufacturing overhead at $ 13 per hour. Actual output produced was 4,500 units. Variable manufacturing overhead incurred was $ 255,000. Fixed manufacturing overhead incurred was $ 385,000. Actual machine- hours were 29,000.

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



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  • CreatedJanuary 15, 2015
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