The Managerial Accountant at Red Ribbon Distribution Company Prepared a Report

question 145

Short Answer

The managerial accountant at Red Ribbon Distribution Company prepared a report in the previous quarter and reported 4,200 actual machine hours were used. The actual rate per machine hour was $32.75 while the standard rate was $28.50. The standard hours allowed was calculated at 4,000. Compute the variable manufacturing overhead (MOH)rate variance to determine the accuracy of the forecasted MOH and, the variable MOH efficiency variance, to determine whether the volume of output was consistent with the number of machine hours used.

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Definitions:

Postdating Checks

Writing a check with a date in the future, which means the check cannot legally be cashed or deposited until that date.

Negotiable Instrument

A voucher guaranteeing that a specified sum of money will be paid, either when demanded or at a certain time, with the payer’s identity specified on the voucher.

Substitute

In a legal or contractual context, to replace one obligation, duty, or individual with another.

Cash

represents money in the physical form of currency, such as coins and banknotes, used to purchase goods, services, or settle debts.