(Appendix 10B)Nova Corporation Produces a Single Product and Uses a Standard

question 185

Essay

(Appendix 10B)Nova Corporation produces a single product and uses a standard cost system to help control costs.Overhead is applied to production on the basis of machine hours.According to the company's flexible budget,the following overhead costs should be incurred at an activity level of 18,000 machine hours (the denominator activity level chosen for the current year):
During the current year,the following operating results were recorded:
At the end of the year,the company's Manufacturing Overhead account showed total debits for actual overhead costs of $145,100 and total credits for overhead actually applied of $136,000.The difference ($9,100)represents underapplied overhead,the cause of which management would like to know.
Required:
a)Compute the predetermined overhead rate that would have been used during the year,showing separately the variable and fixed components of the rate.
b)Show how the $136,000 of "Applied Costs" was computed.
c)Analyze the $9,100 underapplied overhead figure in terms of the variable overhead spending and efficiency variances and the fixed overhead budget and volume variances.
d)(Appendix 10B)Prepare a journal entry to record the variable overhead costs incurred and applied,including the results of the variance analysis.
e)(Appendix 10B)Prepare a journal entry to record the fixed overhead costs incurred and applied,including the results of the variance analysis.

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Definitions:

Follow-up Poll

A subsequent survey conducted to assess changes in opinions or behaviors after an initial poll.

Null Hypothesis

A statistical hypothesis that assumes no significant difference or effect, serving as the default position to be tested against an alternative hypothesis.

Alternative Hypothesis

In hypothesis testing, the hypothesis that proposes a difference or relationship exists between two variables, as opposed to the null hypothesis.

Commute By Car

The act of traveling from home to work or another destination using a car.