Standard Costs and Variance Analysis Paper 12

1

Franklin Glass Works’ production budget for the year ended November 30 was based on 200,000 units. Each unit requires 2 standard hours of labor for completion. Total overhead was budgeted at $900,000 for the year, and the fixed overhead rate was estimated to be $3.00 per unit. Both fixed and variable overhead are assigned to the product on the basis of direct labor hours. The actual data for the year ended November 30 are presented as follows.
Actual production in units 198,000
Actual direct labor hours 440,000
Actual variable overhead $352,000
Actual fixed overhead $575,000
Franklin’s variable overhead spending variance for the year is






2

Franklin Glass Works’ production budget for the year ended November 30 was based on 200,000 units. Each unit requires 2 standard hours of labor for completion. Total overhead was budgeted at $900,000 for the year, and the fixed overhead rate was estimated to be $3.00 per unit. Both fixed and variable overhead are assigned to the product on the basis of direct labor hours. The actual data for the year ended November 30 are presented as follows.
Actual production in units 198,000
Actual direct labor hours 440,000
Actual variable overhead $352,000
Actual fixed overhead $575,000
Franklin’s fixed overhead spending variance for the year is






3

Franklin Glass Works’ production budget for the year ended November 30 was based on 200,000 units. Each unit requires 2 standard hours of labor for completion. Total overhead was budgeted at $900,000 for the year, and the fixed overhead rate was estimated to be $3.00 per unit. Both fixed and variable overhead are assigned to the product on the basis of direct labor hours. The actual data for the year ended November 30 are presented as follows.
Actual production in units 198,000
Actual direct labor hours 440,000
Actual variable overhead $352,000
Actual fixed overhead $575,000
The fixed overhead applied to Franklin’s production for the year is






4

Franklin Glass Works’ production budget for the year ended November 30 was based on 200,000 units. Each unit requires 2 standard hours of labor for completion. Total overhead was budgeted at $900,000 for the year, and the fixed overhead rate was estimated to be $3.00 per unit. Both fixed and variable overhead are assigned to the product on the basis of direct labor hours. The actual data for the year ended November 30 are presented as follows.
Actual production in units 198,000
Actual direct labor hours 440,000
Actual variable overhead $352,000
Actual fixed overhead $575,000
Franklin’s fixed overhead volume variance for the year is






5

Dori Castings, a job-order shop, uses a full-absorption, standard-cost system to account for its production costs. The O/H costs are applied on a direct-labor-hour basis. Dori’s choice of a production volume as a denominator for calculating its factory O/H rate has






6

Dori Castings, a job-order shop, uses a full-absorption, standard-cost system to account for its production costs. The O/H costs are applied on a direct-labor-hour basis. A production volume variance will exist for Dori in a month when






7

Dori Castings, a job-order shop, uses a full-absorption, standard-cost system to account for its production costs. The O/H costs are applied on a direct-labor-hour basis. The amount of fixed factory O/H that Dori will apply to finished production is the






8

Margolos, Inc. ends the month with a volume variance of $6,360 unfavorable. If budgeted fixed O/H was $480,000, O/H was applied on the basis of 32,000 budgeted machine hours, and budgeted variable O/H was $170,000, what were the actual number of machine hours (AH) for the month?






9

A possible short-term problem in controlling overhead costs would be detected by which of the following variances?






10

Cara Williams, a supervisor, controls her department’s costs. The following data relate to her department for the month of June:
Variable factory overhead
Budgeted based on actual input $100,000
Actual 106,250
Fixed factory overhead
Budgeted $31,250
Actual 33,750
What was the department’s total spending variance for June?






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