Wattis Manufacturing Has Established the Following Master Flexible Budget Manufacturing Overhead Is Applied on the Basis of Machine Hours

question 17

Essay

Wattis Manufacturing has established the following master flexible budget:
$\begin{array}{r}\text { Production in Units }\\ \begin{array}{|l|r|r|r|}\hline & \underline{100,00} & \underline{150,000} & 200,000 \\\hline \text { Variable expenses: } & & & \\\hline \text { Raw materials } & \$ 220,000 & 330,000 & 440,000 \\\hline \text { Direct labour } & 240,000 & 360,000 & 480,000 \\\hline \text { Manufacturing overhead } & 180,00 & 270,000 & 360,000 \\\hline \text { Selling and administrative } & \underline{100,00} & \underline{150,000} & \underline{200,000} \\\hline \text { Total variable expenses } & \$ 740,000 & \$ 1,110,000 & \$ 1,480,000 \\\hline\\\hline \text { Fixed expenses: } & & & \\\hline \text { Manufacturing overhead } & \$ 337,500 & \$ 337,500 & \$ 337,500 \\\hline \text { Selling and administrative } & \underline{250,000} & \underline{250,000} & \underline{250,000} \\\hline \text { Total fixed expenses } & \$ 587,500 & \$ 587,500 & \$ 587,500 \\\hline & & & \\\hline \text { Total expenses } & \$ 1,327,500 & \$ 1,697,000 & \$ 2,067,500 \\\hline\end{array}\end{array}$
Manufacturing overhead is applied on the basis of machine hours.At standard,each unit of product requires one machine hour to complete.
Required:
a)The denominator activity level is 150,000 units.What are the predetermined variable and fixed manufacturing overhead rates?
b)Actual data for the year were as follows:
$\begin{array}{|l|r|}\hline \text { Answer: } & \$ 211,680 \\\text { Actual variable manufacturing overhead cost } & \\\hline \text { Actual fixed manufacturing overhead cost } & \$ 343,000 \\\hline \text { Actual machine hours incurred } & 126,000 \\\hline \text { Units produced } & 120,000 \\\hline\end{array}$

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