Flick Company Uses a Standard Cost System in Which Manufacturing

question 9

Essay

Flick Company uses a standard cost system in which manufacturing overhead is applied to units of product on the basis of standard direct labor-hours.The company's total budgeted variable and fixed manufacturing overhead costs at the denominator level of activity are $20,000 for variable overhead and $30,000 for fixed manufacturing overhead.The predetermined overhead rate, including both fixed and variable components, is $2.50 per direct labor-hour.The standards call for two direct labor-hours per unit of output produced.Last year, the company produced 11,500 units of product and worked 22,000 direct labor-hours.Actual costs were $22,500 for variable overhead and $31,000 for fixed manufacturing overhead.
Required:
a.What is the denominator level of activity?
b.What were the standard hours allowed for the output last year?
c.What was the variable overhead rate variance?
d.What was the variable overhead efficiency variance?
e.What was the fixed manufacturing overhead budget variance?
f.What was the fixed manufacturing overhead volume variance?

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Definitions:

Manual Transmission

A type of transmission in vehicles requiring the driver to manually shift gear ratios while driving, offering more control over the vehicle's power and performance compared to automatic transmissions.

Transfer Shaft

A shaft that transfers rotational power from one part of a mechanism, often in vehicles from the transmission to the differential.

Direct Drive

A system where a motor or engine directly drives a machine's mechanism without the use of gears, belts, or chains.

Torque Converters

A device in an automatic transmission that transfers rotating power from the engine to the transmission by using a fluid coupling.