(Appendix 11A)You Have Just Been Hired as the New Executive

question 70

Essay

(Appendix 11A)You have just been hired as the new executive assistant to the manager of the Eastern Division of Global Manufacturing.You have been given the following incomplete records concerning manufacturing overhead for last year: The company uses a standard cost system in which manufacturing overhead costs are applied to products on the basis of standard direct labor-hours (DLHs).
Required:
a.Compute the variable overhead rate variance and indicate whether it was favorable or unfavorable.
b.Compute the fixed overhead volume variance and indicate whether it was favorable or unfavorable.

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Definitions:

High-low Method

An approach to estimate fixed and variable costs by using the highest and lowest levels of activity.

Monthly Production Volume

The total amount of goods produced by a manufacturer within a one-month period, indicating the scale of operations.

Total Cost

The complete cost of production, including both fixed and variable costs.

Mixed Cost

Expenses that have both fixed and variable components, changing with the level of production or sales activity.