Angie Manufacturing Uses a Standard Cost System in Which Manufacturing

question 45

Essay

Angie Manufacturing uses a standard cost system in which manufacturing overhead is applied to units of product on the basis of standard machine-hours. At standard, each unit of product requires one machine-hour to complete. The standard variable overhead is $1.75 per machine-hour and Budgeted Fixed Manufacturing Costs are $300,000 per year. The denominator level of activity is 150,000 machine-hours, or 150,000 units. Actual data for the year were as follows:
$$\begin{array} { l c } \text { Actual variable overhead cost } & \$ 211,680 \\\text { Actual fixed marufacturing overhead cost } & \$ 315,000 \\\text { Actual machine-hours } & 126,000 \\\text { Units produced } & 120,000\end{array}$$
Required:
a. What are the predetermined variable and fixed manufacturing overhead rates for the year?
b. Compute the variable overhead rate and efficiency variances for the year.
c. Compute the fixed manufacturing overhead budget and volume variances for the year.

---

Definitions:

Gray Areas

Situations or subjects that are not clear or are open to interpretation because of a lack of rules, regulations, or definite answers.

Ethical And Socially Responsible

Being ethical and socially responsible involves acting in ways that benefit society and the environment, beyond what is required by law, in conducting business.

Stakeholder Orientation

An approach in business that prioritizes recognizing, understanding, and addressing the needs and concerns of all parties with an interest in the organization.

Channel Stuffing

A practice where a company inflates its sales and earnings by forcefully pushing more products through its distribution channels than the end market can consume.