Erie Co Uses Machine Hours to Apply Standard Overhead Cost to to Production

question 81

Essay

Erie Co. uses machine hours to apply standard overhead cost to production. The following data pertain to October: $\begin{array}{lr}\text { Master budget data: } & \\\text { Units } & 100,500 \\\text { Total machine hours (denominator volume) } & \$ 250,000 \\\text { Total variable overhead cost } & \$ 50,000\\\text { Actual operating results: }\\\text { Variable overhead cost incurred } & \$ 265,000 \\\text { Fixed overhead cost incurred } & \$ 54,000 \\\text { Units manufactured } & 2,250 \\\text { Total machine hours } & 96,000\end{array}$ Required:
Compute the following variances using machine hours as the activity variable used to assign standard overhead costs to production. Show calculations.
1. Variable overhead spending variance
2. Variable overhead efficiency variance
3. Fixed overhead spending variance
4. Fixed overhead production-volume variance

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Definitions:

Individualistic Model

A concept in ecology that emphasizes the importance of individual variation in influencing community structure.

Interaction

A kind of action that occurs as two or more objects have an effect upon one another. The idea of a two-way effect is essential in the concept of interaction, as opposed to a one-way causal effect.

Organismic Model

A perspective in biology and ecology that views an organism as a single, integrated unit.

Frederick Clements

An early 20th-century ecologist known for his theory of plant succession and the concept of the climax community.