Question

The soldering department of Xtel Circuits solders integrated circuits onto circuit boards. The department is highly automated. The existing machinery is state of the art, having been installed only 15 months ago.
Overhead in the department is allocated based on machine hours. Normal volume is 2,000 machine hours per month. Fixed overhead averages $ 160,000 per month, and variable over-head is $ 110 per machine hour. Actual volume for the month of March (which just ended) was 2,400 machine hours, and standard volume was 2,200 machine hours. The accompanying table summarizes the overhead efficiency and volume variances in the soldering department for the last 14 months since the new equipment was installed:


Required:
a. Calculate the overhead rate in the soldering department.
b. Calculate the overhead efficiency and volume variances in the soldering department for March of this year.
c. Comment on any apparent patterns in the overhead variances in the soldering department. What might be causing thepatterns?


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  • CreatedDecember 15, 2014
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