Halt Company Uses a Standard Cost System and Applies Manufacturing

question 78

Essay

Halt Company uses a standard cost system and applies manufacturing overhead to products on the basis of machine hours. The following information is available for the year just ended:
Standard variable-overhead rate per machine hour: $2.50
Standard fixed-overhead rate per machine hour: $5.00
Planned activity during the period: 30,000 machine hours
Actual production: 10,700 finished units
Production standard: Three machine hours per unit
Actual variable overhead: $86,200
Actual total overhead: $225,500
Actual machine hours worked: 35,100
Required:
A. Calculate the budgeted fixed overhead for the year.
B. Did Halt spend more or less than anticipated for fixed overhead? How much?
C. Was variable overhead under- or overapplied during the year? By how much?
D. Was Halt efficient in its use of machine hours? Briefly explain.
E. Would the company's efficiency or inefficiency in the use of machine hours have any effect on Halt's overhead variances? If "yes," which one(s)?

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Definitions:

Pulling Strategy

Promoting a product by generating consumer demand for it, primarily through advertising and sales promotion appeals.

Pharmaceutical Company

An enterprise engaged in the research, development, production, and marketing of medications and healthcare products.

Physicians

are medical professionals who diagnose, treat, and help prevent diseases and injuries.

Competitor's Rates

The pricing strategies or rates set by companies competing in the same market or industry.