(Appendix 10B)Nova Corporation Produces a Single Product and Uses a Standard

question 101

Essay

(Appendix 10B)Nova Corporation produces a single product and uses a standard cost system to help control costs.Overhead is applied to production on the basis of machine hours.According to the company's flexible budget,the following overhead costs should be incurred at an activity level of 18,000 machine hours (the denominator activity level chosen for the current year):
$\begin{array} { l r } \text { Variable Overhead Costs } & \$ 45,000 \\\text { Fixed Overhead Costs } & \$ 108,000 \\\text { Total Overhead Costs } & \$ 15,000 \\\end{array}$
During the current year, the following operating results were recorded
$\begin{array} { l r } \text { Actual Machine Hours Worked } & 15,000 \\\text { Standard Machine Hours Allowed } & 16,000 \\\text { Actual Variable Overhead Cost Incurred } & \$ 38,000 \\\text { Actual Fixed Overhead Cost Incurred } & \$ 107,100\end{array}$

At the end of the year, the company's Manufacturing Overhead account showed total debits for actual overhead costs of $145,100 and total credits for overhead actually applied of $136,000. The difference ($9,100) represents underapplied overhead, the cause of which management would like to know.

Required:

a) Compute the predetermined overhead rate that would have been used during the year, showing separately the variable and fixed components of the rate.
b) Show how the $136,000 of "Applied Costs" was computed.
c) Analyze the $9,100 underapplied overhead figure in terms of the variable overhead spending and efficiency variances and the fixed overhead budget and volume variances.
d) (Appendix 10B) Prepare a journal entry to record the variable overhead costs incurred and applied, including the results of the variance analysis.
e) (Appendix 10B) Prepare a journal entry to record the fixed overhead costs incurred and applied, including the results of the variance analysis.

Differentiate between continental and oceanic plate dynamics.

Explain the geological evidence used to reconstruct past continental configurations.

Understand different social responsibility strategies and their implications.

Recognize the relationship between corporate social responsibility and societal well-being.

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Definitions:

Express Warranty

A clearly stated or written guarantee made by a seller about the quality or performance of a product, which becomes part of the contract.

Samples

Samples are small portions or examples of a product provided to consumers for the purpose of testing quality, functionality, or performance before making a purchase.

Implied Warranty

A legal assurance that a product will meet a minimum level of quality and functionality without being explicitly stated in a contract.

Particular Purpose

Refers specifically to the intended use or requirement for which something is sought or required, often in a legal or contractual context.