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.
Definitions:
Work-In-Process
Refers to partially finished goods that are in the process of being manufactured but are not yet complete.
Master Production Schedule
A detailed plan that outlines exactly what products and quantities will be produced and at what time to meet customer demand.
Phantom Bills
Artificial or virtual bills of materials used in manufacturing and inventory management to simplify complex assemblies and their processes.
Material Requirements Plans
A planning and inventory control system used to manage manufacturing processes by determining material requirements and schedules.
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