Your company, Mackay Products, Inc., has won funding from Shark Tank. This company manufactures one product. Its
Question:
Your company, Mackay Products, Inc., has won funding from Shark Tank. This company manufactures one product. Its variable manufacturing overhead is applied to production based on direct laborhours and the standards per unit are as follows:
Direct materials per unit: pounds at $ per pound
Direct labor per unit: hours at $ per hour
Variable overhead: hours at $ per hour
Budgeted Selling & Administrative Costs are as follows:
Budgeted Fixed advertising expenses: $
Budgeted Fixed selling expenses: $
Budgeted Fixed shipping expenses: $
The planning budget for November was based on producing and selling units. However, during November, the company actually produced and sold units, at a selling price of $ per unit, and incurred the following costs:
a Purchased pounds of direct materials at a cost of $ per pound. All of this material was used in production.
b Direct laborers worked hours at a rate of $ per hour
c Total variable manufacturing overhead for the month was $
d ACTUAL fixed costs: Total fixed advertising expenses were $ Total fixed selling expenses were $ Total fixed shipping expenses were $
Answer the following, SHOWING ALL FORMULAS AND COMPUTATIONS:
Manufacturing Overhead Computations:
What variable manufacturing overhead cost would be included in the companys planning budget for November?
What variable manufacturing overhead cost would be included in the companys flexible budget for November?
What is the variable overhead spending variance for November? Favorable or Unfavorable?
What is the variable overhead rate variance for November? Favorable or Unfavorable?
What is the variable overhead efficiency variance for November? Favorable or Unfavorable?
Introduction to Managerial Accounting
ISBN: 978-0078025792
7th edition
Authors: Peter Brewer, Ray Garrison, Eric Noreen