CarParts Company Was Planning to Produce 3,200,000 Carburetors for the Current

question 34

Essay

CarParts Company was planning to produce 3,200,000 carburetors for the current year. Each carburetor requires 0.375 standard hours of labour for completion. The company uses direct labour hours to assign overhead to products. The total fixed overhead budgeted for the current year was $1,980,000. Total budgeted overhead was $4,050,000. Predetermined overhead rates are calculated using expected production, measured in direct labour hours. Actual results for the year follow: $$\begin{array} { l r } \text { Actual production (units) } & 3,540,000 \\\text { Actual direct labour hours } & 1,190,000 \\\text { Actual fixed ov erhead } & \$ 1,920,000 \\\text { Actual variable overhead } & 2,150,000\end{array}$$ Required:
A. Compute the applied fixed overhead.
B. Compute the fixed overhead spending and volume variances.
C. Compute the applied variable overhead.
D. Compute the variable overhead spending and efficiency variances. Carry per hour computations out to three decimal places.

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Definitions:

Purchase Agreement

A legal document outlining the terms and conditions under which a sale of property will take place.

Financing Statement

A document filed to give public notice to third parties of a secured party's interest in the collateral offered by a debtor.

Perfect

To complete or make flawless; in legal terms, it often refers to making a claim or security interest legally valid or enforceable.

Insuring

The act of providing or arranging insurance as protection against a possible eventuality.