Question: The Stanton Supply Co produces cleaning equipment for professio

The Stanton Supply Co. produces cleaning equipment for professional cleaners. At the start of the year, Stanton estimated variable overhead costs to be $13 per unit and total fixed overhead costs at $300,000 based on a volume of 60,000 units. The detail for the overhead estimates follows:
Variable Overhead
Indirect material ($8) ........... $ 480,000
Utilities ($2) ................ 120,000
Maintenance ($3) .............. 180,000
Total variable overhead .......... $ 780,000
Fixed Overhead
Supervisor salaries .............. $ 125,000
Depreciation ............... 150,000
Other fixed overhead ............ 25,000
Total fixed overhead ............ $ 300,000
Total overhead costs ........... $1,080,000
Actual costs for the year are as follows:
Actual Production ............. 55,000 units
Variable Overhead
Indirect material ............. $ 467,500
Utilities ................. 95,000
Maintenance ............... 170,000
Total variable overhead .......... $ 732,500
Fixed Overhead
Supervisor salaries ........... $ 127,000
Depreciation .............. 145,000
Other fixed overhead ........... 26,000
Total fixed overhead ........... $ 298,000
Total overhead costs ........... $1,030,500

Required
Calculate the controllable overhead variances for variable and fixed overhead. As a manager with limited time, which variances would you focus on?


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  • CreatedSeptember 23, 2013
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