Question: Ultrasonic manufactures three ultrasound imaging systems Avex AvexII and Mel

Ultrasonic manufactures three ultrasound imaging systems: Avex, AvexII, and Mel. Overhead is allocated to each system based on standard direct material dollars in each system. The firm uses a flexible overhead budget to calculate the overhead rate for the coming year, where budgeted volume is based on expected (projected) direct material dollars. The following table summarizes operations for the year:

Fixed manufacturing overhead was budgeted at $ 7.5 million and variable overhead was budgeted at $ 0.30 per direct material dollar. In other words, each dollar spent on direct materials is expected to generate $ 0.30 of variable manufacturing overhead. Actual overhead incurred during the year was $ 10.280 million.

a. Calculate the budgeted overhead rate Ultrasonic will use to absorb overhead to products. Round the overhead rate to two significant digits.
b. Calculate the total amount of over- or underabsorbed overhead Ultrasonic reports for the year.
c. Compute the overhead spending variance, the overhead volume variance, and the overhead efficiencyvariance.
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  • CreatedDecember 15, 2014
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