Sucher Company Uses a Standard Cost System in Which Manufacturing

question 50

Essay

Sucher Company uses a standard cost system in which manufacturing overhead costs are applied to units of product on the basis of standard machine-hours.The company's standards are based on variable manufacturing overhead of $3 per machine-hour and fixed manufacturing overhead of $300,000 per year.The denominator level of activity is 30,000 machine-hours.Standards call for 2.5 machine-hours per unit of output.Actual activity and manufacturing overhead costs for the year are given below: Required:
a.What are the standard hours allowed for the output?
b.What was the variable overhead rate variance?
c.What was the variable overhead efficiency variance?
d.What was the fixed manufacturing overhead budget variance?
e.What was the fixed manufacturing overhead volume variance?

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Definitions:

Income Share

The proportion of total income earned by a specific group, often used in discussions of income inequality.

Normal Profit

The minimum level of profit necessary for a company to remain competitive in the market, essentially covering opportunity costs.

Economic Profit

Profits calculated after considering both explicit costs, like materials and labor, and implicit costs, like opportunity costs, differentiating it from accounting profits.

Pure Rate of Interest

The theoretical return on an investment with no risk of financial loss, representing the time value of money.