The Singapore division of a Canadian telecommunications company uses standard costing for its machine-paced production of telephone

Question:

The Singapore division of a Canadian telecommunications company uses standard costing for its machine-paced production of telephone equipment. Data regarding production during June are as follows:

Variable manufacturing overhead costs incurred ........................... $155,100

Variable manufacturing overhead cost rate ............................. $12 per standard machine-hours

Fixed manufacturing overhead costs incurred .............................. $401,000

Fixed manufacturing overhead budgeted .................................... $390,000

Denominator level in machine-hours .......................................... 13,000

Standard machine-hour allowed per unit of output .......................... 0.30

Units of output ..................................................................... 41,000

Actual machine-hours used ...................................................... 13,300

Ending work-in-process inventory .............................................. 0

Required

1. Prepare an analysis of all manufacturing overhead variances. Use the 4-variance analysis framework illustrated in Exhibit 8-5 (p. 272).

2. Prepare journal entries for manufacturing overheads and their variances.

3. Describe how individual variable manufacturing overhead items are controlled from day to day. Also, describe how individual fixed manufacturing overhead items are controlled?

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Cost Accounting A Managerial Emphasis

ISBN: 978-0131495388

12th edition

Authors: Charles T. Horngren, Srikant M. Datar, George Foster

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