The Phelps Company applies overhead costs to products on the basis of standard direct labor-hours. The...

 

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The Phelps Company applies overhead costs to products on the basis of standard direct labor-hours. The standard cost card shows that 5 direct labor-hours are required per unit of product. Phelps Company had the following budgeted and actual data for March: Units produced. Direct labor-hours….......... Variable overhead costs........ Fixed overhead costs............... Actual 22,000 105,000 $91,000 $52,000 Budgeted 20,000 100,000 $80,000 $50,000 The budgeted direct labor-hours is used as the denominator activity for the month. Calculate Variable manufacturing overhead variances and Fixed overhead manufacturing variances. The Phelps Company applies overhead costs to products on the basis of standard direct labor-hours. The standard cost card shows that 5 direct labor-hours are required per unit of product. Phelps Company had the following budgeted and actual data for March: Units produced. Direct labor-hours….......... Variable overhead costs........ Fixed overhead costs............... Actual 22,000 105,000 $91,000 $52,000 Budgeted 20,000 100,000 $80,000 $50,000 The budgeted direct labor-hours is used as the denominator activity for the month. Calculate Variable manufacturing overhead variances and Fixed overhead manufacturing variances.

Answer rating: 100% (QA)

To calculate the variable manufacturing overhead variances and fixed overhead manufacturing variances well need to determine the standard cost per unit and the actual cost per unit first 1 Calculate the standard cost per unit Standard direct laborhours per unit 5 Variable overhead rate Budgeted variable overhead costs Budgeted direct laborhours 80000 100000 080 per direct laborhour Standard variable overhead cost per unit Variable overhead rate Standard direct laborhours per unit 080 5 400 2 Calculate the actual cost per unit Actual variable overhead rate Actual variable overhead costs Actual direct laborhours 91000 105000 0867 per direct laborhour Actual variable overhead cost per unit Actual variable overhead rate Standard direct laborhours per unit 0867 5 4335 3 Calculate the variable manufacturing overhead variances Variable overhead spending variance ... View the full answer