8-39 Flexible budgets, 4-variance analysis. (CMA, adapted) Wilson Products uses standard costing It allocates manufacturing overhead...

 

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8-39 Flexible budgets, 4-variance analysis. (CMA, adapted) Wilson Products uses standard costing It allocates manufacturing overhead (both variable and fixed) to products on the basis of standard direc manufacturing labor-hours (DLH). Wilson Products develops its manufacturing overhead rate from the cur rent annual budget. The manufacturing overhead budget for 2017 is based on budgeted output of 672,000 units, requiring 3,360,000 DLH. The company is able to schedule production uniformly throughout the year. A total of 72,000 output units requiring 321,000 DLH was produced during May 2017. Manufacturing overhead (MOH) costs incurred for May amounted to $355,800. The actual costs, compared with the annua budget and 1/12 of the annual budget, are as follows: Annual Manufacturing Overhead Budget 2017 Per Total Output Per DLH Monthly MOH Budget Actual MOH Costs for Amount Unit Input Unit May 2017 May 2017 Variable MOH Indirect manufacturing labor $1,008,000 $1.50 $0.30 $ 84,000 $ 84,000 Supplies 672,000 1.00 0.20 56,000 117,000 Fixed MOH Supervision 571,200 0.85 0.17 47,600 41,000 Utilities 369,600 0.55 0.11 30,800 55,000 Depreciation 705,600 1.05 0.21 58,800 88,800 Total $3,326,400 $4.95 $0.99 $277,200 $355,800 8-39 Flexible budgets, 4-variance analysis. (CMA, adapted) Wilson Products uses standard costing It allocates manufacturing overhead (both variable and fixed) to products on the basis of standard direc manufacturing labor-hours (DLH). Wilson Products develops its manufacturing overhead rate from the cur rent annual budget. The manufacturing overhead budget for 2017 is based on budgeted output of 672,000 units, requiring 3,360,000 DLH. The company is able to schedule production uniformly throughout the year. A total of 72,000 output units requiring 321,000 DLH was produced during May 2017. Manufacturing overhead (MOH) costs incurred for May amounted to $355,800. The actual costs, compared with the annua budget and 1/12 of the annual budget, are as follows: Annual Manufacturing Overhead Budget 2017 Per Total Output Per DLH Monthly MOH Budget Actual MOH Costs for Amount Unit Input Unit May 2017 May 2017 Variable MOH Indirect manufacturing labor $1,008,000 $1.50 $0.30 $ 84,000 $ 84,000 Supplies 672,000 1.00 0.20 56,000 117,000 Fixed MOH Supervision 571,200 0.85 0.17 47,600 41,000 Utilities 369,600 0.55 0.11 30,800 55,000 Depreciation 705,600 1.05 0.21 58,800 88,800 Total $3,326,400 $4.95 $0.99 $277,200 $355,800