Assume Mammoth Company uses activity-based costing to allocate variable manufacturing overhead costs to products. The company...

 

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Assume Mammoth Company uses activity-based costing to allocate variable manufacturing overhead costs to products. The company identified three activities with the following information for last quarter. Activity Indirect materials $2.40 per yard Product testing $1.50 per test minute Indirect labor $4.50 per direct labor hour4 hours per unit Standard Rate Standard Quantity per Unit Produced Actual Costs Actual Quantity 7 yards per unit 5 minutes per unit $691 650 $301.000 $930 000 265 000 yards 215,000 test minutes 180,000 direct labor bours Required: Assume Mammoth Company prodaced 40,000 units last quarter. Prepare a variance analysis using the format shown in Figure 4.11 "Variable Overhead Variance Analysis for Jerry's Ice Cream Using Activity-Based Costing". Clearly label each variance as favorable or unfavorable. Actual Quantity Standard Variable Overhead Cost (Flexible Budget) = SQ x SR Actual Variable at Standard Rate Overhead Cost = AQ x SR Purchase Orders $42,000 1,600 orders x $25 per order = $40,000 2,100 orders" x $25 per order = $52,500 $2,000 unfavorable spending variance** $(12,500) favorable efficiency variance Product Testing 210,000 minutes x $0.20 per minute $42,000 $31,000 180,000 test minutes x $0.20 per minute = $36,000 %3D $(5,000) favorable spending variance $(6,000) favorable efficiency variance Energy 420,000 minutes x $0.05 per minute 575,000 machine minutes x $0.05 per minute = $28,750 $27,000 = $21,000 $(1,750) favorable spending variance $7,750 unfavorable efficiency variance Figure 4.11 Variable Overhead Variance Analysis for Jerry's Ice Cream Using Activity-Based Costing Actual Quantity Standard Variable Overhead Cost (Flexible Budget) = SQ x SR Actual Variable at Standard Rate Overhead Cost = AQ x SR Purchase Orders 1,600 orders x $25 per order = $40,000 2,100 orders" x $25 per order = $52,500 $42,000 $2,000 unfavorable spending variance S(12,500) favorable efficiency variance Product Testing 180,000 test minutes x $0.20 per minute = $36,000 $31,000 210,000 minutes x $0.20 per minute $42,000 S(5,000) favorable spending variance $(6,000) favorable efficiency variance Energy 575,000 machine minutes x $0.05 per minute = $28,750 420,000 minutes x $0.05 per minute $27,000 = $21,000 Assume Mammoth Company uses activity-based costing to allocate variable manufacturing overhead costs to products. The company identified three activities with the following information for last quarter. Activity Indirect materials $2.40 per yard Product testing $1.50 per test minute Indirect labor $4.50 per direct labor hour4 hours per unit Standard Rate Standard Quantity per Unit Produced Actual Costs Actual Quantity 7 yards per unit 5 minutes per unit $691 650 $301.000 $930 000 265 000 yards 215,000 test minutes 180,000 direct labor bours Required: Assume Mammoth Company prodaced 40,000 units last quarter. Prepare a variance analysis using the format shown in Figure 4.11 "Variable Overhead Variance Analysis for Jerry's Ice Cream Using Activity-Based Costing". Clearly label each variance as favorable or unfavorable. Actual Quantity Standard Variable Overhead Cost (Flexible Budget) = SQ x SR Actual Variable at Standard Rate Overhead Cost = AQ x SR Purchase Orders $42,000 1,600 orders x $25 per order = $40,000 2,100 orders" x $25 per order = $52,500 $2,000 unfavorable spending variance** $(12,500) favorable efficiency variance Product Testing 210,000 minutes x $0.20 per minute $42,000 $31,000 180,000 test minutes x $0.20 per minute = $36,000 %3D $(5,000) favorable spending variance $(6,000) favorable efficiency variance Energy 420,000 minutes x $0.05 per minute 575,000 machine minutes x $0.05 per minute = $28,750 $27,000 = $21,000 $(1,750) favorable spending variance $7,750 unfavorable efficiency variance Figure 4.11 Variable Overhead Variance Analysis for Jerry's Ice Cream Using Activity-Based Costing Actual Quantity Standard Variable Overhead Cost (Flexible Budget) = SQ x SR Actual Variable at Standard Rate Overhead Cost = AQ x SR Purchase Orders 1,600 orders x $25 per order = $40,000 2,100 orders" x $25 per order = $52,500 $42,000 $2,000 unfavorable spending variance S(12,500) favorable efficiency variance Product Testing 180,000 test minutes x $0.20 per minute = $36,000 $31,000 210,000 minutes x $0.20 per minute $42,000 S(5,000) favorable spending variance $(6,000) favorable efficiency variance Energy 575,000 machine minutes x $0.05 per minute = $28,750 420,000 minutes x $0.05 per minute $27,000 = $21,000 Assume Mammoth Company uses activity-based costing to allocate variable manufacturing overhead costs to products. The company identified three activities with the following information for last quarter. Activity Indirect materials $2.40 per yard Product testing $1.50 per test minute Indirect labor $4.50 per direct labor hour4 hours per unit Standard Rate Standard Quantity per Unit Produced Actual Costs Actual Quantity 7 yards per unit 5 minutes per unit $691 650 $301.000 $930 000 265 000 yards 215,000 test minutes 180,000 direct labor bours Required: Assume Mammoth Company prodaced 40,000 units last quarter. Prepare a variance analysis using the format shown in Figure 4.11 "Variable Overhead Variance Analysis for Jerry's Ice Cream Using Activity-Based Costing". Clearly label each variance as favorable or unfavorable. Actual Quantity Standard Variable Overhead Cost (Flexible Budget) = SQ x SR Actual Variable at Standard Rate Overhead Cost = AQ x SR Purchase Orders $42,000 1,600 orders x $25 per order = $40,000 2,100 orders" x $25 per order = $52,500 $2,000 unfavorable spending variance** $(12,500) favorable efficiency variance Product Testing 210,000 minutes x $0.20 per minute $42,000 $31,000 180,000 test minutes x $0.20 per minute = $36,000 %3D $(5,000) favorable spending variance $(6,000) favorable efficiency variance Energy 420,000 minutes x $0.05 per minute 575,000 machine minutes x $0.05 per minute = $28,750 $27,000 = $21,000 $(1,750) favorable spending variance $7,750 unfavorable efficiency variance Figure 4.11 Variable Overhead Variance Analysis for Jerry's Ice Cream Using Activity-Based Costing Actual Quantity Standard Variable Overhead Cost (Flexible Budget) = SQ x SR Actual Variable at Standard Rate Overhead Cost = AQ x SR Purchase Orders 1,600 orders x $25 per order = $40,000 2,100 orders" x $25 per order = $52,500 $42,000 $2,000 unfavorable spending variance S(12,500) favorable efficiency variance Product Testing 180,000 test minutes x $0.20 per minute = $36,000 $31,000 210,000 minutes x $0.20 per minute $42,000 S(5,000) favorable spending variance $(6,000) favorable efficiency variance Energy 575,000 machine minutes x $0.05 per minute = $28,750 420,000 minutes x $0.05 per minute $27,000 = $21,000 Assume Mammoth Company uses activity-based costing to allocate variable manufacturing overhead costs to products. The company identified three activities with the following information for last quarter. Activity Indirect materials $2.40 per yard Product testing $1.50 per test minute Indirect labor $4.50 per direct labor hour4 hours per unit Standard Rate Standard Quantity per Unit Produced Actual Costs Actual Quantity 7 yards per unit 5 minutes per unit $691 650 $301.000 $930 000 265 000 yards 215,000 test minutes 180,000 direct labor bours Required: Assume Mammoth Company prodaced 40,000 units last quarter. Prepare a variance analysis using the format shown in Figure 4.11 "Variable Overhead Variance Analysis for Jerry's Ice Cream Using Activity-Based Costing". Clearly label each variance as favorable or unfavorable. Actual Quantity Standard Variable Overhead Cost (Flexible Budget) = SQ x SR Actual Variable at Standard Rate Overhead Cost = AQ x SR Purchase Orders $42,000 1,600 orders x $25 per order = $40,000 2,100 orders" x $25 per order = $52,500 $2,000 unfavorable spending variance** $(12,500) favorable efficiency variance Product Testing 210,000 minutes x $0.20 per minute $42,000 $31,000 180,000 test minutes x $0.20 per minute = $36,000 %3D $(5,000) favorable spending variance $(6,000) favorable efficiency variance Energy 420,000 minutes x $0.05 per minute 575,000 machine minutes x $0.05 per minute = $28,750 $27,000 = $21,000 $(1,750) favorable spending variance $7,750 unfavorable efficiency variance Figure 4.11 Variable Overhead Variance Analysis for Jerry's Ice Cream Using Activity-Based Costing Actual Quantity Standard Variable Overhead Cost (Flexible Budget) = SQ x SR Actual Variable at Standard Rate Overhead Cost = AQ x SR Purchase Orders 1,600 orders x $25 per order = $40,000 2,100 orders" x $25 per order = $52,500 $42,000 $2,000 unfavorable spending variance S(12,500) favorable efficiency variance Product Testing 180,000 test minutes x $0.20 per minute = $36,000 $31,000 210,000 minutes x $0.20 per minute $42,000 S(5,000) favorable spending variance $(6,000) favorable efficiency variance Energy 575,000 machine minutes x $0.05 per minute = $28,750 420,000 minutes x $0.05 per minute $27,000 = $21,000 Assume Mammoth Company uses activity-based costing to allocate variable manufacturing overhead costs to products. The company identified three activities with the following information for last quarter. Activity Indirect materials $2.40 per yard Product testing $1.50 per test minute Indirect labor $4.50 per direct labor hour4 hours per unit Standard Rate Standard Quantity per Unit Produced Actual Costs Actual Quantity 7 yards per unit 5 minutes per unit $691 650 $301.000 $930 000 265 000 yards 215,000 test minutes 180,000 direct labor bours Required: Assume Mammoth Company prodaced 40,000 units last quarter. Prepare a variance analysis using the format shown in Figure 4.11 "Variable Overhead Variance Analysis for Jerry's Ice Cream Using Activity-Based Costing". Clearly label each variance as favorable or unfavorable. Actual Quantity Standard Variable Overhead Cost (Flexible Budget) = SQ x SR Actual Variable at Standard Rate Overhead Cost = AQ x SR Purchase Orders $42,000 1,600 orders x $25 per order = $40,000 2,100 orders" x $25 per order = $52,500 $2,000 unfavorable spending variance** $(12,500) favorable efficiency variance Product Testing 210,000 minutes x $0.20 per minute $42,000 $31,000 180,000 test minutes x $0.20 per minute = $36,000 %3D $(5,000) favorable spending variance $(6,000) favorable efficiency variance Energy 420,000 minutes x $0.05 per minute 575,000 machine minutes x $0.05 per minute = $28,750 $27,000 = $21,000 $(1,750) favorable spending variance $7,750 unfavorable efficiency variance Figure 4.11 Variable Overhead Variance Analysis for Jerry's Ice Cream Using Activity-Based Costing Actual Quantity Standard Variable Overhead Cost (Flexible Budget) = SQ x SR Actual Variable at Standard Rate Overhead Cost = AQ x SR Purchase Orders 1,600 orders x $25 per order = $40,000 2,100 orders" x $25 per order = $52,500 $42,000 $2,000 unfavorable spending variance S(12,500) favorable efficiency variance Product Testing 180,000 test minutes x $0.20 per minute = $36,000 $31,000 210,000 minutes x $0.20 per minute $42,000 S(5,000) favorable spending variance $(6,000) favorable efficiency variance Energy 575,000 machine minutes x $0.05 per minute = $28,750 420,000 minutes x $0.05 per minute $27,000 = $21,000 Assume Mammoth Company uses activity-based costing to allocate variable manufacturing overhead costs to products. The company identified three activities with the following information for last quarter. Activity Indirect materials $2.40 per yard Product testing $1.50 per test minute Indirect labor $4.50 per direct labor hour4 hours per unit Standard Rate Standard Quantity per Unit Produced Actual Costs Actual Quantity 7 yards per unit 5 minutes per unit $691 650 $301.000 $930 000 265 000 yards 215,000 test minutes 180,000 direct labor bours Required: Assume Mammoth Company prodaced 40,000 units last quarter. Prepare a variance analysis using the format shown in Figure 4.11 "Variable Overhead Variance Analysis for Jerry's Ice Cream Using Activity-Based Costing". Clearly label each variance as favorable or unfavorable. Actual Quantity Standard Variable Overhead Cost (Flexible Budget) = SQ x SR Actual Variable at Standard Rate Overhead Cost = AQ x SR Purchase Orders $42,000 1,600 orders x $25 per order = $40,000 2,100 orders" x $25 per order = $52,500 $2,000 unfavorable spending variance** $(12,500) favorable efficiency variance Product Testing 210,000 minutes x $0.20 per minute $42,000 $31,000 180,000 test minutes x $0.20 per minute = $36,000 %3D $(5,000) favorable spending variance $(6,000) favorable efficiency variance Energy 420,000 minutes x $0.05 per minute 575,000 machine minutes x $0.05 per minute = $28,750 $27,000 = $21,000 $(1,750) favorable spending variance $7,750 unfavorable efficiency variance Figure 4.11 Variable Overhead Variance Analysis for Jerry's Ice Cream Using Activity-Based Costing Actual Quantity Standard Variable Overhead Cost (Flexible Budget) = SQ x SR Actual Variable at Standard Rate Overhead Cost = AQ x SR Purchase Orders 1,600 orders x $25 per order = $40,000 2,100 orders" x $25 per order = $52,500 $42,000 $2,000 unfavorable spending variance S(12,500) favorable efficiency variance Product Testing 180,000 test minutes x $0.20 per minute = $36,000 $31,000 210,000 minutes x $0.20 per minute $42,000 S(5,000) favorable spending variance $(6,000) favorable efficiency variance Energy 575,000 machine minutes x $0.05 per minute = $28,750 420,000 minutes x $0.05 per minute $27,000 = $21,000 Assume Mammoth Company uses activity-based costing to allocate variable manufacturing overhead costs to products. The company identified three activities with the following information for last quarter. Activity Indirect materials $2.40 per yard Product testing $1.50 per test minute Indirect labor $4.50 per direct labor hour4 hours per unit Standard Rate Standard Quantity per Unit Produced Actual Costs Actual Quantity 7 yards per unit 5 minutes per unit $691 650 $301.000 $930 000 265 000 yards 215,000 test minutes 180,000 direct labor bours Required: Assume Mammoth Company prodaced 40,000 units last quarter. Prepare a variance analysis using the format shown in Figure 4.11 "Variable Overhead Variance Analysis for Jerry's Ice Cream Using Activity-Based Costing". Clearly label each variance as favorable or unfavorable. Actual Quantity Standard Variable Overhead Cost (Flexible Budget) = SQ x SR Actual Variable at Standard Rate Overhead Cost = AQ x SR Purchase Orders $42,000 1,600 orders x $25 per order = $40,000 2,100 orders" x $25 per order = $52,500 $2,000 unfavorable spending variance** $(12,500) favorable efficiency variance Product Testing 210,000 minutes x $0.20 per minute $42,000 $31,000 180,000 test minutes x $0.20 per minute = $36,000 %3D $(5,000) favorable spending variance $(6,000) favorable efficiency variance Energy 420,000 minutes x $0.05 per minute 575,000 machine minutes x $0.05 per minute = $28,750 $27,000 = $21,000 $(1,750) favorable spending variance $7,750 unfavorable efficiency variance Figure 4.11 Variable Overhead Variance Analysis for Jerry's Ice Cream Using Activity-Based Costing Actual Quantity Standard Variable Overhead Cost (Flexible Budget) = SQ x SR Actual Variable at Standard Rate Overhead Cost = AQ x SR Purchase Orders 1,600 orders x $25 per order = $40,000 2,100 orders" x $25 per order = $52,500 $42,000 $2,000 unfavorable spending variance S(12,500) favorable efficiency variance Product Testing 180,000 test minutes x $0.20 per minute = $36,000 $31,000 210,000 minutes x $0.20 per minute $42,000 S(5,000) favorable spending variance $(6,000) favorable efficiency variance Energy 575,000 machine minutes x $0.05 per minute = $28,750 420,000 minutes x $0.05 per minute $27,000 = $21,000 Assume Mammoth Company uses activity-based costing to allocate variable manufacturing overhead costs to products. The company identified three activities with the following information for last quarter. Activity Indirect materials $2.40 per yard Product testing $1.50 per test minute Indirect labor $4.50 per direct labor hour4 hours per unit Standard Rate Standard Quantity per Unit Produced Actual Costs Actual Quantity 7 yards per unit 5 minutes per unit $691 650 $301.000 $930 000 265 000 yards 215,000 test minutes 180,000 direct labor bours Required: Assume Mammoth Company prodaced 40,000 units last quarter. Prepare a variance analysis using the format shown in Figure 4.11 "Variable Overhead Variance Analysis for Jerry's Ice Cream Using Activity-Based Costing". Clearly label each variance as favorable or unfavorable. Actual Quantity Standard Variable Overhead Cost (Flexible Budget) = SQ x SR Actual Variable at Standard Rate Overhead Cost = AQ x SR Purchase Orders $42,000 1,600 orders x $25 per order = $40,000 2,100 orders" x $25 per order = $52,500 $2,000 unfavorable spending variance** $(12,500) favorable efficiency variance Product Testing 210,000 minutes x $0.20 per minute $42,000 $31,000 180,000 test minutes x $0.20 per minute = $36,000 %3D $(5,000) favorable spending variance $(6,000) favorable efficiency variance Energy 420,000 minutes x $0.05 per minute 575,000 machine minutes x $0.05 per minute = $28,750 $27,000 = $21,000 $(1,750) favorable spending variance $7,750 unfavorable efficiency variance Figure 4.11 Variable Overhead Variance Analysis for Jerry's Ice Cream Using Activity-Based Costing Actual Quantity Standard Variable Overhead Cost (Flexible Budget) = SQ x SR Actual Variable at Standard Rate Overhead Cost = AQ x SR Purchase Orders 1,600 orders x $25 per order = $40,000 2,100 orders" x $25 per order = $52,500 $42,000 $2,000 unfavorable spending variance S(12,500) favorable efficiency variance Product Testing 180,000 test minutes x $0.20 per minute = $36,000 $31,000 210,000 minutes x $0.20 per minute $42,000 S(5,000) favorable spending variance $(6,000) favorable efficiency variance Energy 575,000 machine minutes x $0.05 per minute = $28,750 420,000 minutes x $0.05 per minute $27,000 = $21,000