Eastern Company Uses a Standard Cost System in Which Manufacturing

question 146

Essay

Eastern Company uses a standard cost system in which manufacturing overhead is applied to units of product on the basis of standard direct labor-hours (DLHs).The denominator activity level is 60,000 direct labor-hours,or 300,000 units.
• A standard cost card for the company's product follows:
• Actual data for the year follow:
Required:
a.Compute the variable overhead rate and efficiency variances.
b.Compute the fixed manufacturing overhead budget and volume variances.

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Definitions:

Depreciation Expense

The portion of the cost of a fixed asset that is recorded as an expense each year of its useful life.

Cash Payments

Transactions involving the outflow of cash to settle obligations or purchase goods and services.

Cash Budget

A forecast of cash inflows and outflows over a certain period, used to manage the company's cash balance and ensure liquidity.

Sales Clerk

An employee who handles the exchange of goods for payment, typically in a retail setting, assisting customers in finding products and completing purchases.