Question;Ex. 221;Caroline, Inc. planned to produce 20,000 units of;product and work 100,000 direct labor hours in 2013. Manufacturing overhead at;the 100,000 direct labor hours level of activity was estimated to be;Variable;manufacturing overhead $ 700,000;Fixed;manufacturing overhead 300,000;Total;manufacturing overhead $1,000,000;At the end of 2013, 19,000 units of;product were actually produced and 98,000 actual direct labor hours were;worked. Total actual overhead costs for 2013 were $935,000.;Instructions;(a) Compute the total overhead;variance.;a(b) Compute;the overhead controllable variance.;a(c) Compute;the overhead volume variance.;aEx. 222;Jackson Manufacturing planned to produce 20,000;units of product and work at the 60,000 direct labor hours level of activity;for 2013. Manufacturing overhead at this level of activity and the;predetermined overhead rate are as follows;Predetermined;Overhead;Rate per;Direct;Labor Hour;Variable manufacturing overhead $300,000 $5;Fixed manufacturing overhead 120,000 2;Total manufacturing overhead $420,000 $7;At the end of 2013, 21,000 units were actually;produced and 61,500 direct labor hours were actually worked. Total actual;manufacturing overhead costs were $430,000.;Instructions;Using a two-variance analysis of manufacturing;overhead, calculate the following variances and indicate whether they are;favorable or unfavorable;(a) Overhead controllable;variance.;(b) Overhead volume variance.;A;Ex. 223;Adam;Corporation prepared the following variance report.;ADAM CORPORATION;Variance;Report?Purchasing;Department;for;Week Ended January 9, 2013;Type of Quantity Actual Standard Price;Materials Purchased Price Price;Variance Explanation;Brown?;lbs. $5.25 $5.00 $6,000? Price;increase;Green 8,000;oz.?;3.25 1,600 U Rush;order;White 22,000;units $0.45? 660 F Bought;larger quantity;Ex. 223 (Cont.);Instructions;Fill in the appropriate amounts or;letters for the question marks in the report.;Ex. 224;Pepper Industries uses a standard cost accounting;system. During March, 2013, the company reported the following manufacturing;variances;Materials;price variance $1,600 F;Materials;quantity variance 2,400 U;Labor;price variance 600 U;Labor;quantity variance 2,200 U;Overhead;controllable 500 F;Overhead;volume 3,000 U;In addition, 15,000 units of product were sold at;$18 per unit. Each unit sold had a standard cost of $14. Selling and;administrative expenses for the month were $15,000.;Instructions;Prepare an;income statement for management for the month ending March 31, 2013.;aEx. 225;Howard, Inc.;developed the following standards for 2013;Howard, Inc.;Standard Cost Card;Cost Elements Standard;Quantity ? Standard Price = Standard Cost;Direct materials 5 pounds $ 5 $25;Direct labor 1 hour $18 18;Manufacturing overhead 1 hour $10 10;$53;The company planned to produce 120,000 units of;product and work at the 120,000 direct labor level of activity in 2013. The;company uses a standard cost accounting system which records standard costs in;the accounts and recognizes variances in the accounts at the earliest;opportunity. During 2013, 116,000 actual units of product were produced.;Instructions;Prepare the journal entries to record the;following transactions for Howard, Inc. during 2013.;(a) Purchased;588,000 pounds of raw materials for $4.90 per pound on account.;(b) Actual;direct labor payroll amounted to $2,108,000 for 114,000 actual direct labor;hours worked. Factory labor cost is to be recorded and distributed to production.;(c) Direct;materials issued for production amounted to 588,000 pounds which actually cost;$4.90 per pound.;(d) Actual;manufacturing overhead costs incurred were $1,152,000 in 2013.;(e) Manufacturing;overhead was applied when the 116,000 units were completed.;(f) Transferred;the 116,000 completed units to finished goods.;aEx. 226;Presented below is a flexible manufacturing budget;for Ganem Manufacturing, which manufactures fine timepieces;Activity;Index;Standard direct labor hours 2,800 3,200 3,600 4,000;Variable costs;Indirect;materials $ 5,600 $ 6,400 $ 7,200 $ 8,000;Indirect;labor 3,220 3,680 4,140 4,600;Utilities 7,280 8,320 9,360 10,400;Total;variable 16,100 18,400 20,700 23,000;Fixed costs;Supervisory;salaries 1,000 1,000 1,000 1,000;Rent 3,000 3,000 3,000 3,000;Total;fixed 4,000 4,000 4,000 4,000;Total costs $20,100 $22,400 $24,700 $27,000;aEx. 226 (Cont.);The company applies the overhead on the basis of;direct labor hours at $7.00 per direct labor hour and the standard hours per;timepiece is 1/2 hour each. The company's actual production was 5,400 timepieces;with 2,700 actual hours of direct labor. Normal capacity is 3,200 hours. Actual;overhead was $20,200.;Instructions;(a) Compute the controllable and volume overhead;variances.;a(b) Prepare;the entries for manufacturing overhead during the period and the entry to;recognize the overhead variances at the end of the period.;Ex. 227;The following information was taken from the;annual manufacturing overhead cost budget of Cinnamon Manufacturing;Variable;manufacturing overhead costs $186,000;Fixed;manufacturing overhead costs $124,000;Normal;production level in direct labor hours 62,000;Normal;production level in units 31,000;During the year, 30,000 units were produced, 64,000;hours were worked, and the actual manufacturing overhead costs were $322,000.;The actual fixed manufacturing overhead costs did not deviate from the budgeted;fixed manufacturing overhead costs. Overhead is applied on the basis of direct;labor hours.;Ex. 227 (Cont.);Instructions;(a) Compute the total, fixed, and;variable predetermined manufacturing overhead rates.;a(b) Compute;the total, controllable, and volume overhead variances.;Ex. 228;Monte Industries has a standard costing system. The;following data are available for July;a. Actual manufacturing overhead cost incurred;$22,000;b. Actual machine hours worked: 1,600;c. Overhead volume variance: $3,600 Unfavorable;d. Total overhead variance: $2,000 Unfavorable;e. Overhead is assigned to production on the;basis of machine hours;Instructions;Determine the amount of (1) the controllable;overhead variance and (2) the overhead applied.
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