Virklund Microbrewery is producing three types of beer made from locally grown products. The company uses...

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Virklund Microbrewery is producing three types of beer made from locally grown products. The company uses nectar from Beech, Birch and Mable. After the brewing processes the beer is finally bottled (500 ml per bottle) and distributed to local gourmet-restaurants. Virklund Microbrewery has recently participated in competitions and won a gold medal for their Beech bear. Virklund Microbrewery uses an absorption costing system to assign overhead to their three products for inventory costing. A single, predetermined, plant wide overhead rate is computed using a flexible manufacturing overhead budget. Variable manufacturing overhead is budgeted to be € 16.00 per direct labor hour and fixed manufacturing overhead is budgeted to be € 845,000 per year. Virklund Microbrewery incurred actual manufacturing overhead in 2016 of € 1,250,000. The following table summarizes budgeted and operating data for the fiscal year of 2016: Mable 210 200 Actual batches Budgeted number of batches Actual direct hours per batch Budgeted direct labor hours per batch Beech Birch 520 370 500 400 17 18 15 18 34 35 Required 1. Calculate Virklund Microbrewery's plant wide overhead rate for 2016. 2. To produce one batch of Birch beer 20 direct labor hours are needed. How much manufacturing overhead is absorbed by this one batch? 3. How much under/over absorbed overhead did Virklund Microbrewery have in 2016? 4. Write a memo to the management of Virklund Microbrewery discussing how to account for the under/over absorbed overhead you calculated in question 3. Virklund Microbrewery is producing three types of beer made from locally grown products. The company uses nectar from Beech, Birch and Mable. After the brewing processes the beer is finally bottled (500 ml per bottle) and distributed to local gourmet-restaurants. Virklund Microbrewery has recently participated in competitions and won a gold medal for their Beech bear. Virklund Microbrewery uses an absorption costing system to assign overhead to their three products for inventory costing. A single, predetermined, plant wide overhead rate is computed using a flexible manufacturing overhead budget. Variable manufacturing overhead is budgeted to be € 16.00 per direct labor hour and fixed manufacturing overhead is budgeted to be € 845,000 per year. Virklund Microbrewery incurred actual manufacturing overhead in 2016 of € 1,250,000. The following table summarizes budgeted and operating data for the fiscal year of 2016: Mable 210 200 Actual batches Budgeted number of batches Actual direct hours per batch Budgeted direct labor hours per batch Beech Birch 520 370 500 400 17 18 15 18 34 35 Required 1. Calculate Virklund Microbrewery's plant wide overhead rate for 2016. 2. To produce one batch of Birch beer 20 direct labor hours are needed. How much manufacturing overhead is absorbed by this one batch? 3. How much under/over absorbed overhead did Virklund Microbrewery have in 2016? 4. Write a memo to the management of Virklund Microbrewery discussing how to account for the under/over absorbed overhead you calculated in question 3.

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Answer and detailed step by step explanation 1 To calculate Virklund Microbrewerys plant wide overhead rate for 2016 we need to first calculate the to... View the full answer