Question :
81) _____________
82) Zebra Jewellers manufactured 2,000 necklaces during March with : 1196273
81) _____________
82) Zebra Jewellers manufactured 2,000 necklaces during March with a total overhead budget of $49,600. However, while manufacturing the 2,000th necklace the microcomputer that contained the month’s cost information broke down. With the computer out of commission, the accountant has been unable to complete the variance analysis report. The missing information of the report is lettered in the following set of data:
Variable overhead:
Standard cost per necklace: 0.4 labour hour at $8 per hour
Actual costs:
$8,400 for 752 hours
Flexible budget: a
Total flexible-budget variance: b
Variable overhead spending variance: c
Variable overhead efficiency variance: d
Fixed overhead:
Budgeted costs: e
Actual costs: f
Flexible-budget variance:$2,000 favourable
Required:
Compute the missing elements in the report represented by the lettered items. 82) _____________
83) McKenna Company manufactured 1,000 units during April with a total overhead budget of $12,400.
However, while manufacturing the 1,000 units the microcomputer that contained the month’s cost
information broke down.
With the computer out of commission, the accountant has been unable to
complete the variance analysis report.
The information missing from the report is lettered in the
following set of data:
Variable overhead:
Standard cost per unit: 0.4 labor hour at $4 per hour
Actual costs: $2,100 for 376 hours
Flexible budget:
a
Total flexible-budget variance:
b
Variable overhead spending variance:
c
Variable overhead efficiency variance:
d
Fixed overhead:
Budgeted costs:
e
Actual costs:
f
Flexible-budget variance: $500 favorable
Required:
Compute the missing elements in the report represented by the lettered items 83) _____________
84) Teri’s Furniture uses the 4-variance analysis to evaluate manufacturing overhead in its table factory. The information for the May overhead expenditures is as follows:
Budgeted output units 14,000 tables
Budgeted fixed manufacturing overhead $22,400
Budgeted variable manufacturing overhead $3.00 per direct labour hour
Budgeted direct manufacturing labour hours 0.2 hour per table
Fixed manufacturing costs incurred $24,000
Direct manufacturing labour hours used 4,000
Variable manufacturing costs incurred $11,000
Actual units manufactured 15,000
Required:
a.Compute a 4-variance analysis for the plant controller.
b.Prepare all necessary journal entries to record the actual costs, allocated costs, and variances. Keep variable and fixed entries separate.
84) _____________
85) Casey Corporation produces a special line of basketball hoops.
Casey Corporation produces the hoops in
batches.
To manufacture a batch of the basketball hoops, Casey Corporation must set up the machines
and molds.
Setup costs are batch-level costs because they are associated with batches rather than
individual units of products.
A separate Setup Department is responsible for setting up machines and
molds for different styles of basketball hoops.
Setup overhead costs consist of some costs that are variable and some costs that are fixed with
respect to the number of setup-hours.
The following information pertains to January 2007.
Static-budgetActual
AmountsAmounts
Basketball hoops produced and sold30,00028,000
Batch size (number of units per batch)200250
Setup-hours per batch54
Variable overhead cost per setup hour$10$9
Total fixed setup overhead costs$22,500$21,000
Required:
a.Calculate the efficiency variance for variable setup overhead costs.
b.Calculate the spending variance for variable setup overhead costs.
c.Calculate the flexible-budget variance for variable setup overhead costs.
d.Calculate the spending variance for fixed setup overhead costs.
e.Calculate the production-volume variance for fixed setup overhead costs.
85) _____________
86) Gibson Homes has budgeted construction overhead for August of $260,000 for variable costs and $435,000 for fixed costs. Actual costs for the month totalled $275,000 for variable and $445,000 for fixed. Allocated fixed overhead totalled $440,000. The company tracks each item in an overhead control account before allocations are made to individual jobs. Spending variances for August were $10,000 unfavourable for variable and $10,000 unfavourable for fixed. The production volume overhead variance was $5,000 favourable.
Required:
a.Prepare journal entries for the actual costs incurred.
b.Prepare journal entries to record the variances for August. 86) _____________
87) Calculate the fixed manufacturing overhead spending variance based on the following data. State any assumptions necessary.
Fixed manufacturing overhead allocated $65,000
dr
Fixed manufacturing production volume variance $20,000
dr
Variable manufacturing overhead spending variance
$4,000
Unfav.
Fixed manufacturing overhead control
$135,000
cr 87) _____________
84) a.4-variance analysis:
Variable overhead spending variance = $11,000 – (4,000 x $3)
= $1,000 favourable
Variable overhead efficiency variance = $3 x (4,000 – 3,000)
= $3,000 unfavourable
15,000 units x 0.2 hours = 3,000
Fixed overhead spending variance = $24,000 – $22,400 = $1,600 unfavourable
Fixed OH production volume variance = $22,400 – (15,000 x 0.2 x $8) = $1,600 favourable
$22,400/(14,000 units x 0.2 hours) = $8
b.Journal entries
Variable Overhead Control$11,000
Account Payable and other accounts$11,000
To record actual variable construction overhead.
Fixed Overhead Control$24,000
Accumulated Amortization, etc.$24,000
To record actual fixed construction overhead.
Work in Process Control$9,000
Variable Overhead Allocated$9,000
To record allocation of variable manufacturing overhead costs;
3,000 x $3
Work in Process Control24,000
Fixed Overhead Allocated$24,000
To record allocation of fixed manufacturing overhead costs:
15,000 x 0.2 x $8
Variable Overhead Allocated$9,000
Variable Overhead Efficiency Variance3,000
Variable Overhead Spending Variance$ 1,000
Variable Overhead Control11,000
To record variances for the period.
Fixed Overhead Allocated$24,000
Fixed Overhead Spending Variance1,600
Fixed Overhead Production Volume Overhead Variance$ 1,600
Fixed Overhead Control24,000
To record variances for the period. 85) a.((28,000 / 250) x 4 x $10) — (28,000 / 200) x 5 x $10) = $2,520 (F)
b.(28,000 / 250) x 4 x ($9 — $10) = $448 (F)
c.$2,520 (F) + $448 (F) = $2,968 (F)
d.$22,500 — $21,000 = $1,500 (F)
e.Normal setup-hours = (30,000 / 200) x 5 = 750 hours
OH rate = $22,500 / 750 = $30 per setup-hour
$22,500 — ((28,000 / 200) x 5 x $30) = $1,500 (U)
86) a.
Variable Overhead Control$275,000
Account Payable and other accounts$275,000
To record actual variable construction overhead.
Fixed Overhead Control$445,000
Accumulated Amortization, etc.$445,000
To record actual fixed construction overhead.
b.
Variable Overhead Allocated$260,000
Variable Overhead Spending Variance10,000
Variable Overhead Efficiency Variance*5,000
Variable Overhead Control$275,000
To record variances for the period.
*arrived at this number by default
Fixed Overhead Allocated$440,000
Fixed Overhead Spending Variance10,000
Fixed Overhead Production Volume Variance $ 5,000
Fixed Overhead Control445,000
To record variances for the period.
87) $135,000 – 65,000 – 20,000 = $50,000 Unfavourable.
No assumptions required.
88) Effective planning of variable overhead costs involves the undertaking of only those variable activities that add value to the process. It also includes the planning of the cost drivers of the activities so that they can be utilized most efficiently.
Planning of fixed overhead costs likewise includes only those activities that add value. A critical aspect of fixed cost planning is selecting the appropriate level of operations. The selection of the denominator is important for determining the fixed rates that will be charged during the year.
