Reference no: EM132976109
Question - Ana Carillo and Associates is a medium-sized company located near a large metropolitan area in the Midwest. The company manufactures cabinets of mahogany, oak, and other fine woods for use in expensive homes, restaurants, and hotels. Although some of the work is custom, many of the cabinets are a standard size.
One such non-custom model is called Luxury Base Frame. Normal production is 1,000 units. Each unit has a direct labor hour standard of 5 hours. Overhead is applied to production based on standard direct labor hours. During the most recent month, only 680 units were produced; 4,500 direct labor hours were allowed for standard production, but only 4,000 hours were used. Standard and actual overhead costs were as follows.
Standard (1,000 units); Actual (680 units)
Indirect materials $ 9,700; $ 9,900
Indirect labor 34,700; 41,100
(Fixed) Manufacturing supervisors salaries 18,100; 17,700
(Fixed) Manufacturing office employees salaries 10,500; 10,100
(Fixed) Engineering costs 21,800; 20,200
Computer costs 8,100; 8,100
Electricity 2,000; 2,000
(Fixed) Manufacturing building depreciation 6,400; 6,400
(Fixed) Machinery depreciation 2,400; 2,400
(Fixed) Trucks and forklift depreciation 1,200; 1,200
Small tools 600; 1,100
(Fixed) Insurance 400; 400
(Fixed) Property taxes 200; 200
Total $116,100; $120,800
Overhead application rate is $23.22
Applied overhead: $104,490
Required - How calculate the total overhead variance?