Reference no: EM13337452
Wymont Company produces a single product that requires a large amount of labor time. Overhead cost is applied on the basis of standard direct labor-hours. Variable manufacturing overhead should be $2.00 per standard direct labor-hour and fixed manufacturing overhead should be $180,000 per year.
The company's product requires 4 feet of direct material that has a standard cost of $3.00 per foot. The product requires 1.5 hours of direct labor time. The standard labor rate is $12.00 per hour.
During the year, the company had planned to operate at a denominator activity level of 30,000 direct labor-hours and to produce 20,000 units of product. Actual activity and costs for the year were as follows:
|
| Number of units produced |
22,000 |
| Actual direct labor-hours worked |
35,000 |
| Actual variable manufacturing overhead cost incurred |
$ 63,000 |
| Actual fixed manufacturing overhead cost incurred |
$ 181,000 |
|
Required:
1. Compute the predetermined overhead rate for the year. Break the rate down into variable and fixed components.
|
| Predetermined overhead rate |
$ per DLH |
| Variable rate |
$ per DLH |
| Fixed rate |
$ per DLH |
|
2. Compute the standard cost card for the company's product.
|
| Direct materials, feet at $ per foot |
$ |
| Direct labor, DLHs at $ per DLH |
|
| Variable overhead, DLHs at $ per DLH |
|
| Fixed overhead, DLHs at $ per DLH |
|
|
|
| Standard cost per unit |
$ |
|
|
|
3a. Compute the standard direct labor-hours allowed for the year's production.
Standard direct labor hours
3b. Complete the following Manufacturing Overhead T-account for the year:
4. Determine the reason for the underapplied or overapplied overhead from above by computing the variable overhead rate and efficiency variances and the fixed overhead budget and volume variances.
Variable overhead rate variance
Variable overhead efficiency variance
Fixed overhead budget variance
Fixed overhead volume variance