Patton Corp

question 4

Essay

Patton Corp.uses a standard cost system to account for the costs of its one product.Budgeted fixed overhead is $75,000,budgeted production is 2,500 per month,and practical capacity is 3,000 units.During November,Patton produced 2,400 units.Fixed overhead incurred totaled $70,310.
Assume Patton calculates its fixed overhead rate based on budgeted production.
a.What is the fixed overhead rate?
b.What is the fixed overhead volume variance?
c.By how much was fixed overhead over- or underapplied?
Now assume Patton calculates its fixed overhead rate based on practical capacity.
d.What is the fixed overhead rate?
e.What is the expected (planned)capacity variance?
f.What is the unexpected (unplanned)capacity variance?
g.By how much was fixed overhead over- or underapplied?

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Definitions:

Optimal Use

The most efficient, effective, or desirable utilization of resources or goods to achieve the best outcome or return.

Interest Rate

The percentage of a loan charged as cost to the borrower for the use of the money.

Capital Projects

Long-term investments made by companies or governments to create, improve, or maintain physical assets.

Interest Rate

The percentage charged by a lender to a borrower for the use of assets, typically expressed as an annual percentage of the principal.