Blaze Corporation allocates overhead on the basis of DLH and the standard amount per allocation base is 3.00 DLH per unit. For March, the company planned production of 10,000 units (80% of its production capacity of 12,500 units) and prepared the following budget. The company actually operated at 90% capacity (11,250 units) in March and incurred actual total overhead costs of $179,660. Overhead Budget Production in units. Budgeted variable overhead Budgeted fixed overhead 80% Operating Levels 10,000 $ 81,000 $ 96,000 1. Compute the standard overhead rate. Hint Standard allocation base at 80% capacity is 30,000 DLH, computed as 10,000 units x 3.00 DLH per unit. 2. Compute the total overhead varlance. 3. Compute the overhead controllable variance. 4. Compute the overhead volume varlance.
Blaze Corporation allocates overhead on the basis of DLH and the standard amount per allocation base is 3.00 DLH per unit. For March, the company planned production of 10,000 units (80% of its production capacity of 12,500 units) and prepared the following budget. The company actually operated at 90% capacity (11,250 units) in March and incurred actual total overhead costs of $179,660. Overhead Budget Production in units. Budgeted variable overhead Budgeted fixed overhead 80% Operating Levels 10,000 $ 81,000 $ 96,000 1. Compute the standard overhead rate. Hint Standard allocation base at 80% capacity is 30,000 DLH, computed as 10,000 units x 3.00 DLH per unit. 2. Compute the total overhead varlance. 3. Compute the overhead controllable variance. 4. Compute the overhead volume varlance.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter9: Evaluating Variances From Standard Costs
Section: Chapter Questions
Problem 16E: Thomas Textiles Corporation began November with a budget for 60,000 hours of production in the...
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:Blaze Corporation allocates overhead on the basis of DLH and the standard amount per allocation base is 3.00 DLH per unit. For
March, the company planned production of 10,000 units (80% of its production capacity of 12,500 units) and prepared the following
budget. The company actually operated at 90% capacity (11,250 units) in March and incurred actual total overhead costs of $179,660.
Overhead Budget
Production in units
Budgeted variable overhead
Budgeted fixed overhead
80% Operating
Levels
10,000
$ 81,000
$ 96,000
1. Compute the standard overhead rate. Hint Standard allocation base at 80% capacity is 30,000 DLH, computed as 10,000 units x
3.00 DLH per unit.
2. Compute the total overhead variance.
3. Compute the overhead controllable variance.
4. Compute the overhead volume variance.
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