Extrim Company produces monitors. Extrim’s plant in San Antonio uses a standard costing system. The standard costing system relies on direct labor hours to assign overhead costs to production. The direct labor standard indicates that four direct labor hours should be used for every monitor produced. (The San Antonio plant produces only one model.) The normal production volume is 120,000 units. The budgeted overhead for the coming year is as follows:
FOH $1,286,400
VOH $ 888,000
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Extrim applies overhead on the basis of direct labor hours. During the year, Extrim produced 119,000 units, worked 487,900 direct labor hours, and incurred actual fixed overhead costs of $1.3 million and actual variable overhead costs of $927,010. Required: 1. Calculate the standard fixed overhead rate and the standard variable overhead rate (per direct labor hour). Round your answers to the nearest cent.
2. Compute the applied fixed overhead and the applied variable overhead.
What is the total fixed overhead variance? Total variable overhead variance?
3. Conceptual Connection: Break down the total fixed overhead variance into a spending variance and a volume variance.
4. Conceptual Connection: Compute the variable overhead spending and efficiency variances.
Discuss the significance of each answer in questions 3 and 4. The input in the box below will not be graded, but may be reviewed and considered by your instructor. I need example of how to come with the answer. Thanks |
