DUBAI Manufacturing has established the following master flexible budget: Sales in Units 150,000 Sales Less variable...

 

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DUBAI Manufacturing has established the following master flexible budget: Sales in Units 150,000 Sales Less variable expenses: Raw materials Direct labor Required: Manufacturing overhead Selling and administrative Total variable Contribution margin Less fixed expenses: Manufacturing overhead Selling and administrative Total fixed Net operating income 100,000 $1,600,000 $2,400,000 $3,200,000 200,000 250,000 175,000 100,000 725,000 1,087,500 875,000 1,312,500 300,000 240,000 540,000 $ 335.000 300,000 375,000 262,500 150,000 Actual variable overhead cost Actual fixed overhead cost Actual machine-hours Units produced 200,000 $211,680 $315,000 400,000 500,000 350,000 200,000 The company uses a standard cost system in which manufacturing overhead is applied to units of product based on machine-hours. At standard, each unit of product requires one machine-hour to complete. The denominator level of activity is 150,000 machine-hours, or 150,000 units. Actual data for the year were as follows: 126,000 120,000 1,450,000 1,750,000 300,000 240,000 540,000 $ 772,500 $1,210.000 300,000 240,000 540,000 a. What are the predetermined variable and fixed manufacturing overhead rates for the year? b. Compute the variable manufacturing overhead spending and efficiency variances for the year. c. Compute the fixed manufacturing overhead budget and volume variances for the year. d. Prepare the flexible budget. e. Explain and interpret these variances. DUBAI Manufacturing has established the following master flexible budget: Sales in Units 150,000 Sales Less variable expenses: Raw materials Direct labor Required: Manufacturing overhead Selling and administrative Total variable Contribution margin Less fixed expenses: Manufacturing overhead Selling and administrative Total fixed Net operating income 100,000 $1,600,000 $2,400,000 $3,200,000 200,000 250,000 175,000 100,000 725,000 1,087,500 875,000 1,312,500 300,000 240,000 540,000 $ 335.000 300,000 375,000 262,500 150,000 Actual variable overhead cost Actual fixed overhead cost Actual machine-hours Units produced 200,000 $211,680 $315,000 400,000 500,000 350,000 200,000 The company uses a standard cost system in which manufacturing overhead is applied to units of product based on machine-hours. At standard, each unit of product requires one machine-hour to complete. The denominator level of activity is 150,000 machine-hours, or 150,000 units. Actual data for the year were as follows: 126,000 120,000 1,450,000 1,750,000 300,000 240,000 540,000 $ 772,500 $1,210.000 300,000 240,000 540,000 a. What are the predetermined variable and fixed manufacturing overhead rates for the year? b. Compute the variable manufacturing overhead spending and efficiency variances for the year. c. Compute the fixed manufacturing overhead budget and volume variances for the year. d. Prepare the flexible budget. e. Explain and interpret these variances.

Answer rating: 100% (QA)

a The predetermined variable overhead rate is 725 per machinehour ie 725000 150000 machinehours The predetermined fixed overhead rate is 2 per machine... View the full answer