Monday, February 28, 2011
Friday, February 25, 2011
Wednesday, February 23, 2011
Tuesday, February 22, 2011
Monday, February 21, 2011
Friday, February 18, 2011
MA-ECONOMICS EXTERNAL KARACHI UNIVERSITY FRESH COACHING CLASSES
MA-ECONOMICS EXTERNAL KARACHI UNIVERSITY FRESH COACHING CLASSES
MICRO ECONOMICS
STATISTICS
MACRO ECONOMICS
NOTES & GUESS PAPERS ARE ALSO AVAILABLE
MICRO ECONOMICS
STATISTICS
MACRO ECONOMICS
NOTES & GUESS PAPERS ARE ALSO AVAILABLE
Wednesday, February 16, 2011
IMPORTANT QUESTIONS B.COM PART 1 STATISTICS
SECTION A
EQUATION OF STRAIGHT LINE
MATRICES
SECTION B
CORRELATION
REGRESSION ANALYSIS
INDEX NUMBERS
MEASURES OF CENTRAL TENDENCY
SECTION C
SAMPLING
ESTIMATION
HYPOTHESIS
CHI SQUARE
BEST OF LUCK
EQUATION OF STRAIGHT LINE
MATRICES
SECTION B
CORRELATION
REGRESSION ANALYSIS
INDEX NUMBERS
MEASURES OF CENTRAL TENDENCY
SECTION C
SAMPLING
ESTIMATION
HYPOTHESIS
CHI SQUARE
BEST OF LUCK
Thursday, February 10, 2011
Wednesday, February 9, 2011
Tuesday, February 8, 2011
KARACHI UNIVERSITY HAS EXTENDED THE REGISTRATION DATE OF MA - EXTERNAL.
KARACHI UNIVERSITY HAS EXTENDED THE REGISTRATION DATE OF MA - EXTERNAL.
Monday, February 7, 2011
Standard Costing
Standard Costing
A. Standard Cost--the anticipated cost of producing a unit of output
1. Recordkeeping--the standard cost is used by many companies to determine
inventory valuation and cost of goods sold for interim periods
2. Benchmark--the standard cost is used by many companies as a goal for
employees to strive to meet
3. Performance Evaluation--the standard cost is used by many companies to
evaluate employee performance and serve as an input into the planning
process
B. Variances--the difference between total actual costs incurred and the total
standard costs applied to the output produced during the period
1. Direct Materials
a. Computation--the difference between the actual direct materials
cost and the standard direct materials cost applied to production
can be divided into price and quantity components
1) Materials Price Variance--the materials price variance is equal
to the difference between the actual quantity of direct
materials purchased multiplied by the actual price for direct
materials and the actual quantity of direct materials purchased
multiplied by the standard price for direct materials
a) Favorable/Unfavorable--the materials price variance is
labeled as favorable if the actual price for direct
materials is less than the standard price for direct
materials and as unfavorable if the actual price for direct
materials is greater than the standard price for direct
materials
2) Materials Quantity Variance--the materials quantity variance is
equal to the difference between the actual quantity of direct
materials used in production multiplied by the standard price
for direct materials and the standard quantity of direct
materials allowed for the actual production multiplied by the
standard price for direct materials
a) Favorable/Unfavorable--the materials quantity variance is
labeled as favorable if the actual quantity of direct
materials used in production is less than the standard
quantity of direct materials allowed for the actual
production and as unfavorable if the actual quantity of
direct materials used in production is greater than the
standard quantity of direct materials allowed for the
actual production
b. Recording
1) Materials Price Variance--the materials price variance is
recorded when the direct materials are purchased
a) Materials--the materials account is debited for the actual
quantity of direct materials purchased multiplied by the
standard price for direct materials
b) Accounts Payable--the accounts payable account or the cash
account is credited for the actual quantity of direct
materials purchased multiplied by the actual price for
direct materials
c) Materials Price Variance--the materials price variance
account is debited/credited for the difference
2) Materials Quantity Variance--the materials quantity variance is
recorded when the direct materials are used in production
a) Work in Process--the work in process account is debited for
the standard quantity of direct materials allowed for the
actual production multiplied by the standard price for
direct materials
b) Materials--the materials account is credited for the actual
quantity of direct materials used in production multiplied
by the standard price for direct materials
c) Materials Quantity Variance--the materials quantity
variance account is debited/credited for the difference
c. Illustration--one unit of output should be manufactured using 3
pounds of direct materials; the standard direct materials cost is
$5 per pound; normal capacity is 100,000 units of output; during
the year 301,000 pounds of direct materials were purchased at a
cost of $5.10 per pound, and 290,000 pounds of direct materials
were used in producing 95,000 units of output
Actual Actual Standard Standard
Quantity Quantity Quantity Quantity
Purchased Purchased Used Allowed
x x x x
Actual Standard Standard Standard
_ Price _ _ Price _ _ Price _ _ Price _
1,535,100 1,505,000 1,450,000 1,425,000
(301,000 x 5.10) (301,000 x 5) (290,000 x 5) (95,000 x 3 x 5)
30,100 U 25,000 U
Materials Materials
Price Quantity
Variance Variance
Materials 1,505,000
Materials Price Variance 30,100
Accounts Payable 1,535,100
Work in Process 1,425,000
Materials Quantity Variance 25,000
Materials 1,450,000
2. Direct Labor
a. Computation--the difference between the actual direct labor cost
and the standard direct labor cost applied to production can be
divided into rate and efficiency components
1) Labor Rate Variance--the labor rate variance is equal
to the difference between the actual quantity of direct hours
multiplied by the actual rate for direct labor hours and the
actual quantity of direct labor hours multiplied by the
standard rate for direct labor hours
a) Favorable/Unfavorable--the labor rate variance is labeled
as favorable if the actual rate for direct labor hours is
less than the standard rate for direct labor hours and as
unfavorable if the actual rate for direct labor hours is
greater than the standard rate for direct labor hours
2) Labor Efficiency Variance--the labor efficiency variance is
equal to the difference between the actual hours of direct
labor multiplied by the standard rate for direct labor hours
and the standard quantity of direct labor hours allowed for the
actual production multiplied by the standard rate for direct
labor hours
a) Favorable/Unfavorable--the labor efficiency variance is
labeled as favorable if the actual quantity of direct labor
hours is less than the standard quantity of direct labor
hours allowed for the actual production and as unfavorable
if the actual quantity of direct labor hours is greater
than the standard quantity of direct labor hours allowed
for the actual production
b. Recording--both the labor rate variance and the labor efficiency
variance are recorded when the direct labor cost is incurred
1) Work in Process--the work in process account is debited for the
standard quantity of direct labor hours allowed for the actual
production multiplied by the standard rate for direct labor
hours
2) Wages Payable--the wages payable account or the cash account is
credited for the actual quantity of direct labor hours
multiplied by the actual rate for direct labor hours
3) Labor Rate Variance--the labor rate variance account is
debited/credited for the unfavorable/favorable labor rate
variance
4) Labor Efficiency Variance--the labor efficiency variance
account is debited/credited for the unfavorable/favorable labor
labor efficiency variance
c. Illustration--one unit of output should be manufactured in 4 direct
labor hours; the standard direct labor cost is $30 per hour; normal
capacity is 100,000 units of output; during the year 95,000 units
were produced in 385,000 direct labor hours at a cost of $30.40 per
direct labor hour
Standard
Actual Actual Direct
Direct Direct Labor
Labor Labor Hours
Hours Hours Allowed
x x x
Actual Standard Standard
_ Rate _ _ Rate _ _ Rate _
11,704,000 11,550,000 11,400,000
(385,000 x 30.40) (385,000 x 30) (95,000 x 4 x 30)
154,000 U 150,000 U
Labor Labor
Rate Efficiency
Variance Variance
Work in Process 11,704,000
Labor Rate Variance 154,000
Labor Efficiency Variance 150,000
Wages Payable 11,400,000
3. Manufacturing Overhead
a. Computation--the difference between the actual manufacturing
overhead and the standard manufacturing overhead applied to
production can be divided into spending, efficiency, and volume
components
1) Manufacturing Overhead Spending Variance--the manufacturing
overhead spending variance is equal to the difference between
the actual manufacturing overhead (the actual variable overhead
plus the actual fixed overhead) and the budgeted overhead for
the actual direct labor hours (the actual quantity of direct
labor hours multiplied by the standard rate for variable
overhead plus the standard cost for fixed overhead)
a) Favorable/Unfavorable--the manufacturing overhead spending
variance is labeled as favorable if the actual
manufacturing overhead is less than the budgeted overhead
for the actual direct labor hours and as unfavorable if the
actual manufacturing overhead is greater than the budgeted
overhead for the actual direct labor hours
2) Manufacturing Overhead Efficiency Variance--the manufacturing
overhead efficiency variance is equal to the difference between
the budgeted overhead for the actual direct labor hours and the
budgeted overhead for the standard quantity of direct labor
hours allowed for the actual production (the standard quantity
of direct labor hours allowed for the actual production
multiplied by the standard rate for variable overhead plus the
standard cost for fixed overhead)
a) Favorable/Unfavorable--the manufacturing overhead
efficiency variance is labeled as favorable if the budgeted
overhead for the actual direct labor hours is less than the
budgeted overhead for the standard quantity of direct labor
hours allowed for the actual production and as unfavorable
if the budgeted overhead for the actual direct labor hours
is greater than the budgeted overhead for the standard
quantity of direct labor hours allowed for the actual
production
3) Manufacturing Overhead Volume Variance--the manufacturing
overhead volume variance is equal to the difference between
the budgeted overhead for the standard quantity of direct labor
hours allowed for the actual production and the applied
overhead (the standard quantity of direct labor hours allowed
for the actual production multiplied by the standard
manufacturing overhead rate)
a) Standard Manufacturing Overhead Rate--the standard
manufacturing overhead rate is equal to the standard
quantity of direct labor hours allowed for the normal
capacity multiplied by the standard rate for the variable
overhead plus the standard cost for fixed overhead divided
by the standard quantity of direct labor hours allowed for
the normal capacity
b) Favorable/Unfavorable--the manufacturing overhead volume
variance is labeled as favorable if the budgeted overhead
for the standard quantity of direct labor hours allowed for
the actual production is less than the applied overhead and
as unfavorable if the budgeted overhead for the standard
quantity of direct labor hours allowed for the actual
production is greater than the applied overhead
b. Recording--the manufacturing overhead variances are recorded at the
end of the period
1) Manufacturing Overhead Application--manufacturing overhead is
applied to production when the direct labor hours are incurred
a) Work in Process--the work in process is debited for the
standard quantity of direct labor hours allowed for actual
production multiplied by the standard manufacturing
overhead rate
2) Manufacturing Overhead Variances--the manufacturing overhead
variances are recorded when the actual manufacturing overhead
and the applied manufacturing overhead accounts are closed at
the end of the period
a) Manufacturing Overhead Spending Variance--the manufacturing
overhead spending variance account is debited/credited for
the unfavorable/favorable manufacturing overhead spending
variance
b) Manufacturing Overhead efficiency Variance--the
manufacturing overhead efficiency variance account is
debited/credited for the unfavorable/favorable
manufacturing overhead spending variance
c) Manufacturing Overhead Volume Variance--the manufacturing
overhead volume variance account is debited/credited for
the unfavorable/favorable manufacturing overhead spending
variance
c. Illustrations
1) One unit of output should be manufactured in 4 direct labor
hours; budgeted variable overhead is $8 per direct labor hour;
budgeted fixed overhead is $7,600,000; normal capacity is
100,000 units of output; during the year 95,000 units were
produced in 385,000 direct labor hours, actual variable
overhead amounted to $3,100,000, and actual fixed overhead
amounted to $7,650,000
Budgeted
Budgeted Overhead
Overhead For
For Standard
Actual Direct
Direct Labor
Actual Labor Hours Applied
_Overhead_ _ Hours _ _Allowed _ _Overhead_
3,100,000 3,080,000 3,040,000 3,040,600
(385,000 x 8) (95,000 x 4 x 8) (380,000 x 8)
7,650,000 7,600,000 7,600,000 7,220,000
_ _ _ _ _ _ (380,000 x 19)
10,750,000 10,680,000 10,640,000 10,260,000
70,000 U 40,000 U 380,000 U
Manufacturing Manufacturing Manufacturing
Overhead Overhead Overhead
Spending Efficiency Volume
Variance Variance Variance
Standard Manufacturing Overhead Rate = (100,000 x 4 x 8 + 7,600,000) / 400,000
= 27
Work in Process 10,260,000
Applied Manufacturing Overhead 10,260,000
Applied Manufacturing Overhead 10,260,000
Manufacturing Overhead Spending Variance 70,000
Manufacturing Overhead Efficiency Variance 40,000
Manufacturing Overhead Volume Variance 380,000
Manufacturing Overhead 10,750,000
2) One unit of output should be manufactured in 5 direct labor
hours; budgeted variable overhead is $18 per direct labor hour;
budgeted fixed overhead is $6,000,000; normal capacity is
50,000 units of output; during the year 48,000 units were
produced in 244,000 direct labor hours, actual variable
overhead amounted to $4,400,000, and actual fixed overhead
amounted to $6,020,000
Budgeted
Budgeted Overhead
Overhead For
For Standard
Actual Direct
Direct Labor
Actual Labor Hours Applied
_Overhead_ _ Hours _ _Allowed _ _Overhead_
4,400,000 4,392,000 4,320,000 4,320,000
(244,000 x 18) (48,000 x 5 x 18) (380,000 x 18)
6,020,000 6,000,000 6,000,000 5,760,000
_ _ _ _ _ _ (240,000 x 24)
10,420,000 10,392,000 10,320,000 10,080,000
28,000 U 72,000 U 240,000 U
Manufacturing Manufacturing Manufacturing
Overhead Overhead Overhead
Spending Efficiency Volume
Variance Variance Variance
Standard Manufacturing Overhead Rate = (50,000 x 5 x 18 + 6,000,000) / 250,000
= 42
Work in Process 10,080,000
Applied Manufacturing Overhead 10,080,000
Applied Manufacturing Overhead 10,080,000
Manufacturing Overhead Spending Variance 28,000
Manufacturing Overhead Efficiency Variance 72,000
Manufacturing Overhead Volume Variance 240,000
Manufacturing Overhead 10,420,000
A. Standard Cost--the anticipated cost of producing a unit of output
1. Recordkeeping--the standard cost is used by many companies to determine
inventory valuation and cost of goods sold for interim periods
2. Benchmark--the standard cost is used by many companies as a goal for
employees to strive to meet
3. Performance Evaluation--the standard cost is used by many companies to
evaluate employee performance and serve as an input into the planning
process
B. Variances--the difference between total actual costs incurred and the total
standard costs applied to the output produced during the period
1. Direct Materials
a. Computation--the difference between the actual direct materials
cost and the standard direct materials cost applied to production
can be divided into price and quantity components
1) Materials Price Variance--the materials price variance is equal
to the difference between the actual quantity of direct
materials purchased multiplied by the actual price for direct
materials and the actual quantity of direct materials purchased
multiplied by the standard price for direct materials
a) Favorable/Unfavorable--the materials price variance is
labeled as favorable if the actual price for direct
materials is less than the standard price for direct
materials and as unfavorable if the actual price for direct
materials is greater than the standard price for direct
materials
2) Materials Quantity Variance--the materials quantity variance is
equal to the difference between the actual quantity of direct
materials used in production multiplied by the standard price
for direct materials and the standard quantity of direct
materials allowed for the actual production multiplied by the
standard price for direct materials
a) Favorable/Unfavorable--the materials quantity variance is
labeled as favorable if the actual quantity of direct
materials used in production is less than the standard
quantity of direct materials allowed for the actual
production and as unfavorable if the actual quantity of
direct materials used in production is greater than the
standard quantity of direct materials allowed for the
actual production
b. Recording
1) Materials Price Variance--the materials price variance is
recorded when the direct materials are purchased
a) Materials--the materials account is debited for the actual
quantity of direct materials purchased multiplied by the
standard price for direct materials
b) Accounts Payable--the accounts payable account or the cash
account is credited for the actual quantity of direct
materials purchased multiplied by the actual price for
direct materials
c) Materials Price Variance--the materials price variance
account is debited/credited for the difference
2) Materials Quantity Variance--the materials quantity variance is
recorded when the direct materials are used in production
a) Work in Process--the work in process account is debited for
the standard quantity of direct materials allowed for the
actual production multiplied by the standard price for
direct materials
b) Materials--the materials account is credited for the actual
quantity of direct materials used in production multiplied
by the standard price for direct materials
c) Materials Quantity Variance--the materials quantity
variance account is debited/credited for the difference
c. Illustration--one unit of output should be manufactured using 3
pounds of direct materials; the standard direct materials cost is
$5 per pound; normal capacity is 100,000 units of output; during
the year 301,000 pounds of direct materials were purchased at a
cost of $5.10 per pound, and 290,000 pounds of direct materials
were used in producing 95,000 units of output
Actual Actual Standard Standard
Quantity Quantity Quantity Quantity
Purchased Purchased Used Allowed
x x x x
Actual Standard Standard Standard
_ Price _ _ Price _ _ Price _ _ Price _
1,535,100 1,505,000 1,450,000 1,425,000
(301,000 x 5.10) (301,000 x 5) (290,000 x 5) (95,000 x 3 x 5)
30,100 U 25,000 U
Materials Materials
Price Quantity
Variance Variance
Materials 1,505,000
Materials Price Variance 30,100
Accounts Payable 1,535,100
Work in Process 1,425,000
Materials Quantity Variance 25,000
Materials 1,450,000
2. Direct Labor
a. Computation--the difference between the actual direct labor cost
and the standard direct labor cost applied to production can be
divided into rate and efficiency components
1) Labor Rate Variance--the labor rate variance is equal
to the difference between the actual quantity of direct hours
multiplied by the actual rate for direct labor hours and the
actual quantity of direct labor hours multiplied by the
standard rate for direct labor hours
a) Favorable/Unfavorable--the labor rate variance is labeled
as favorable if the actual rate for direct labor hours is
less than the standard rate for direct labor hours and as
unfavorable if the actual rate for direct labor hours is
greater than the standard rate for direct labor hours
2) Labor Efficiency Variance--the labor efficiency variance is
equal to the difference between the actual hours of direct
labor multiplied by the standard rate for direct labor hours
and the standard quantity of direct labor hours allowed for the
actual production multiplied by the standard rate for direct
labor hours
a) Favorable/Unfavorable--the labor efficiency variance is
labeled as favorable if the actual quantity of direct labor
hours is less than the standard quantity of direct labor
hours allowed for the actual production and as unfavorable
if the actual quantity of direct labor hours is greater
than the standard quantity of direct labor hours allowed
for the actual production
b. Recording--both the labor rate variance and the labor efficiency
variance are recorded when the direct labor cost is incurred
1) Work in Process--the work in process account is debited for the
standard quantity of direct labor hours allowed for the actual
production multiplied by the standard rate for direct labor
hours
2) Wages Payable--the wages payable account or the cash account is
credited for the actual quantity of direct labor hours
multiplied by the actual rate for direct labor hours
3) Labor Rate Variance--the labor rate variance account is
debited/credited for the unfavorable/favorable labor rate
variance
4) Labor Efficiency Variance--the labor efficiency variance
account is debited/credited for the unfavorable/favorable labor
labor efficiency variance
c. Illustration--one unit of output should be manufactured in 4 direct
labor hours; the standard direct labor cost is $30 per hour; normal
capacity is 100,000 units of output; during the year 95,000 units
were produced in 385,000 direct labor hours at a cost of $30.40 per
direct labor hour
Standard
Actual Actual Direct
Direct Direct Labor
Labor Labor Hours
Hours Hours Allowed
x x x
Actual Standard Standard
_ Rate _ _ Rate _ _ Rate _
11,704,000 11,550,000 11,400,000
(385,000 x 30.40) (385,000 x 30) (95,000 x 4 x 30)
154,000 U 150,000 U
Labor Labor
Rate Efficiency
Variance Variance
Work in Process 11,704,000
Labor Rate Variance 154,000
Labor Efficiency Variance 150,000
Wages Payable 11,400,000
3. Manufacturing Overhead
a. Computation--the difference between the actual manufacturing
overhead and the standard manufacturing overhead applied to
production can be divided into spending, efficiency, and volume
components
1) Manufacturing Overhead Spending Variance--the manufacturing
overhead spending variance is equal to the difference between
the actual manufacturing overhead (the actual variable overhead
plus the actual fixed overhead) and the budgeted overhead for
the actual direct labor hours (the actual quantity of direct
labor hours multiplied by the standard rate for variable
overhead plus the standard cost for fixed overhead)
a) Favorable/Unfavorable--the manufacturing overhead spending
variance is labeled as favorable if the actual
manufacturing overhead is less than the budgeted overhead
for the actual direct labor hours and as unfavorable if the
actual manufacturing overhead is greater than the budgeted
overhead for the actual direct labor hours
2) Manufacturing Overhead Efficiency Variance--the manufacturing
overhead efficiency variance is equal to the difference between
the budgeted overhead for the actual direct labor hours and the
budgeted overhead for the standard quantity of direct labor
hours allowed for the actual production (the standard quantity
of direct labor hours allowed for the actual production
multiplied by the standard rate for variable overhead plus the
standard cost for fixed overhead)
a) Favorable/Unfavorable--the manufacturing overhead
efficiency variance is labeled as favorable if the budgeted
overhead for the actual direct labor hours is less than the
budgeted overhead for the standard quantity of direct labor
hours allowed for the actual production and as unfavorable
if the budgeted overhead for the actual direct labor hours
is greater than the budgeted overhead for the standard
quantity of direct labor hours allowed for the actual
production
3) Manufacturing Overhead Volume Variance--the manufacturing
overhead volume variance is equal to the difference between
the budgeted overhead for the standard quantity of direct labor
hours allowed for the actual production and the applied
overhead (the standard quantity of direct labor hours allowed
for the actual production multiplied by the standard
manufacturing overhead rate)
a) Standard Manufacturing Overhead Rate--the standard
manufacturing overhead rate is equal to the standard
quantity of direct labor hours allowed for the normal
capacity multiplied by the standard rate for the variable
overhead plus the standard cost for fixed overhead divided
by the standard quantity of direct labor hours allowed for
the normal capacity
b) Favorable/Unfavorable--the manufacturing overhead volume
variance is labeled as favorable if the budgeted overhead
for the standard quantity of direct labor hours allowed for
the actual production is less than the applied overhead and
as unfavorable if the budgeted overhead for the standard
quantity of direct labor hours allowed for the actual
production is greater than the applied overhead
b. Recording--the manufacturing overhead variances are recorded at the
end of the period
1) Manufacturing Overhead Application--manufacturing overhead is
applied to production when the direct labor hours are incurred
a) Work in Process--the work in process is debited for the
standard quantity of direct labor hours allowed for actual
production multiplied by the standard manufacturing
overhead rate
2) Manufacturing Overhead Variances--the manufacturing overhead
variances are recorded when the actual manufacturing overhead
and the applied manufacturing overhead accounts are closed at
the end of the period
a) Manufacturing Overhead Spending Variance--the manufacturing
overhead spending variance account is debited/credited for
the unfavorable/favorable manufacturing overhead spending
variance
b) Manufacturing Overhead efficiency Variance--the
manufacturing overhead efficiency variance account is
debited/credited for the unfavorable/favorable
manufacturing overhead spending variance
c) Manufacturing Overhead Volume Variance--the manufacturing
overhead volume variance account is debited/credited for
the unfavorable/favorable manufacturing overhead spending
variance
c. Illustrations
1) One unit of output should be manufactured in 4 direct labor
hours; budgeted variable overhead is $8 per direct labor hour;
budgeted fixed overhead is $7,600,000; normal capacity is
100,000 units of output; during the year 95,000 units were
produced in 385,000 direct labor hours, actual variable
overhead amounted to $3,100,000, and actual fixed overhead
amounted to $7,650,000
Budgeted
Budgeted Overhead
Overhead For
For Standard
Actual Direct
Direct Labor
Actual Labor Hours Applied
_Overhead_ _ Hours _ _Allowed _ _Overhead_
3,100,000 3,080,000 3,040,000 3,040,600
(385,000 x 8) (95,000 x 4 x 8) (380,000 x 8)
7,650,000 7,600,000 7,600,000 7,220,000
_ _ _ _ _ _ (380,000 x 19)
10,750,000 10,680,000 10,640,000 10,260,000
70,000 U 40,000 U 380,000 U
Manufacturing Manufacturing Manufacturing
Overhead Overhead Overhead
Spending Efficiency Volume
Variance Variance Variance
Standard Manufacturing Overhead Rate = (100,000 x 4 x 8 + 7,600,000) / 400,000
= 27
Work in Process 10,260,000
Applied Manufacturing Overhead 10,260,000
Applied Manufacturing Overhead 10,260,000
Manufacturing Overhead Spending Variance 70,000
Manufacturing Overhead Efficiency Variance 40,000
Manufacturing Overhead Volume Variance 380,000
Manufacturing Overhead 10,750,000
2) One unit of output should be manufactured in 5 direct labor
hours; budgeted variable overhead is $18 per direct labor hour;
budgeted fixed overhead is $6,000,000; normal capacity is
50,000 units of output; during the year 48,000 units were
produced in 244,000 direct labor hours, actual variable
overhead amounted to $4,400,000, and actual fixed overhead
amounted to $6,020,000
Budgeted
Budgeted Overhead
Overhead For
For Standard
Actual Direct
Direct Labor
Actual Labor Hours Applied
_Overhead_ _ Hours _ _Allowed _ _Overhead_
4,400,000 4,392,000 4,320,000 4,320,000
(244,000 x 18) (48,000 x 5 x 18) (380,000 x 18)
6,020,000 6,000,000 6,000,000 5,760,000
_ _ _ _ _ _ (240,000 x 24)
10,420,000 10,392,000 10,320,000 10,080,000
28,000 U 72,000 U 240,000 U
Manufacturing Manufacturing Manufacturing
Overhead Overhead Overhead
Spending Efficiency Volume
Variance Variance Variance
Standard Manufacturing Overhead Rate = (50,000 x 5 x 18 + 6,000,000) / 250,000
= 42
Work in Process 10,080,000
Applied Manufacturing Overhead 10,080,000
Applied Manufacturing Overhead 10,080,000
Manufacturing Overhead Spending Variance 28,000
Manufacturing Overhead Efficiency Variance 72,000
Manufacturing Overhead Volume Variance 240,000
Manufacturing Overhead 10,420,000
Tuesday, February 1, 2011
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