Exam 13: Relevant Costs for Decision Making

Franklin Glass Works uses a standard cost system in which manufacturing overhead is applied to units of product on the basis of direct labour-hours. Each unit requires two standard hours of labour for completion. The denominator activity for the year was based on budgeted production of 200,000 units. Total overhead was budgeted at £900,000 for the year, and the fixed overhead rate was £3.00 per unit. The actual data pertaining to the manufacturing overhead for the year are presented below: Actual production 198,000 units Actual direct labour-hours 440,000 direct labour-hours Actual variable overhead £352,000 Actual fixed overhead £575,000 -Franklin's fixed overhead budget variance for the year is

A manufacturing company has a standard costing system based on direct labour-hours (DLHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below: Denominator level of activity 3,700 DLHs Overhead costs at the denominator activity level: Variable overhead cost £28,490 Fixed owerhead cost £47,545 The following data pertain to operations for the most recent period: Actual hours 3,900 DLHs Standard hours 3,900allowed for the actual output 3,850 DLHs Actual total variable overhead cost £29,445 Actual total fixed overhead cost £47,995 - What is the predetermined overhead rate to the nearest cent

The Ammon Company uses a standard cost system in which manufacturing overhead is applied to units on the basis of machine-hours. During July, the company budgeted £350,000 in manufacturing overhead cost at a denominator activity of 25,000 machine-hours. At standard, each unit of finished product requires 5 machine-hours. The follow cost and activity were recorded during July Total actual manufacturing ov erhead cost incurred £325,000 Units of product completed 4,500 Actual machine-hours worked 23,000 The amount of overhead cost that the company applied to work in process for July was

A manufacturing company has a standard costing system based on direct labour-hours (DLHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below: Denominator level of activity 3,700 DLHs Overhead costs at the denominator activity level: Variable overhead cost £28,490 Fixed owerhead cost £47,545 The following data pertain to operations for the most recent period: Actual hours 3,900 DLHs Standard hours 3,900allowed for the actual output 3,850 DLHs Actual total variable overhead cost £29,445 Actual total fixed overhead cost £47,995 - What was the fixed overhead volume variance for the period to the nearest pound

Wicks Company has established a flexible budget for manufacturing overhead based on direct labour-hours. Budgeted costs at 100,000 direct labour-hours are as follows: Variable costs (total): Packing supplies £70,000 Indirect labour £90,000 Fixed costs (total): Utilities £50,000 Rent £20,000 Insurance £10,000 - The flexible budget for factory overhead would show that the variable overhead per direct labour-hour is

The Euro Company wants to compare the performance of three business units. All the business units produce the same product with similar output per month. The company uses a flexible budget to plan and control manufacturing overhead costs. Overhead costs are applied to products on the basis of direct labour-hours. The standard cost card shows that 5 direct labour-hours are required per unit of product. Phelps Company had the following budgeted and actual data for March: Actual Budgeted Units produced 11,000 10,000 Directlabour-hours 65,000 60,000 Variable overhead costs £84,000 £80,000 Fiked overhead costs £44,000 £40,000 $\text { *Represents the denom inator activity for the month. }$ German Business Unit Actual Budgeted Units produced 11,000 10,000 Directlabour-hours 65,000 60,000 Variable overhead costs £84,000 £80,000 Fiked overhead costs £44,000 £40,000 $\text { *Represents the denom inator activity for the month. }$ French Business Unit Actual Budgeted Units produced 11,000 10,000 Directlabour-hours 65,000 60,000 Variable overhead costs £84,000 £80,000 Fiked overhead costs £44,000 £40,000 $\text { *Represents the denom inator activity for the month. }$ -The variable overhead spending variance for March for the French Business Unit is

The Euro Company wants to compare the performance of three business units. All the business units produce the same product with similar output per month. The company uses a flexible budget to plan and control manufacturing overhead costs. Overhead costs are applied to products on the basis of direct labour-hours. The standard cost card shows that 5 direct labour-hours are required per unit of product. Phelps Company had the following budgeted and actual data for March: Actual Budgeted Units produced 11,000 10,000 Directlabour-hours 65,000 60,000 Variable overhead costs £84,000 £80,000 Fiked overhead costs £44,000 £40,000 $\text { *Represents the denom inator activity for the month. }$ German Business Unit Actual Budgeted Units produced 11,000 10,000 Directlabour-hours 65,000 60,000 Variable overhead costs £84,000 £80,000 Fiked overhead costs £44,000 £40,000 $\text { *Represents the denom inator activity for the month. }$ French Business Unit Actual Budgeted Units produced 11,000 10,000 Directlabour-hours 65,000 60,000 Variable overhead costs £84,000 £80,000 Fiked overhead costs £44,000 £40,000 $\text { *Represents the denom inator activity for the month. }$ - The fixed overhead budget variance for March for the Italian Business Unit is

At the end of the year, a company's Manufacturing Overhead account contained the following data:Manufacturing Overhead Actual $£ 82,140 \quad £ 78,260 \quad$ Applied If the denominator activity for the year was 40,000 machine-hours, and if 36,400 machine-hours were allowed for the year's production, then the predetermined overhead rate per machine-hour was

With a flexible budget a manager can determine what costs should have been attained at a given level of activity.

Franklin Glass Works uses a standard cost system in which manufacturing overhead is applied to units of product on the basis of direct labour-hours. Each unit requires two standard hours of labour for completion. The denominator activity for the year was based on budgeted production of 200,000 units. Total overhead was budgeted at £900,000 for the year, and the fixed overhead rate was £3.00 per unit. The actual data pertaining to the manufacturing overhead for the year are presented below: Actual production 198,000 units Actual direct labour-hours 440,000 direct labour-hours Actual variable overhead £352,000 Actual fixed overhead £575,000 - Franklin's variable overhead efficiency variance for the year is

At Eady Company, maintenance is a variable cost that varies directly with machine-hours. The performance report for July showed that actual maintenance costs totaled £8,650 and that the associated spending variance was £250 unfavourable. If 5,000 machine-hours were actually worked during July, the budgeted maintenance cost per machine-hour was