Question

use the following information for the exercises below. (algo)
the following information applies to the questions displayed below.

manuel company predicts it will operate at 80% of its productive capacity. its overhead allocation base is dlh and its standard amount per allocation base is 0.5 dlh per unit. the company reports the following for this period.

flexible budget at 80% capacity
production (in units): 53,000
overhead
variable overhead: $ 291,500
fixed overhead: 53,000
total overhead: $ 344,500

actual results
production (in units): 48,800
total overhead: $ 344,600

exercise 21-18 (algo) volume and controllable variances lo p4

complete this question by entering your answers in the tabs below.

required 1 | required 2

compute the overhead volume variance. indicate variance as favorable or unfavorable.
note: indicate the effect of the variance by selecting favorable, unfavorable, or no variance.

Explanation:

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<reasoning>

Calculate standard overhead rates per direct labor hour (DLH)

\[

$$\begin{aligned} &\text{Budgeted DLH at } 80\% \text{ capacity} = 53,000 \text{ units} \times 0.5 \text{ DLH/unit} = 26,500 \text{ DLH} \\ &\text{Standard Variable Overhead Rate (SVR)} = \frac{\$291,500}{26,500 \text{ DLH}} = \$11.00 \text{ per DLH} \\ &\text{Standard Fixed Overhead Rate (SFR)} = \frac{\$53,000}{26,500 \text{ DLH}} = \$2.00 \text{ per DLH} \end{aligned}$$

\]

Determine standard hours allowed for actual production

\[

$$\begin{aligned} &\text{Standard hours allowed (SHA)} = 48,800 \text{ units} \times 0.5 \text{ DLH/unit} = 24,400 \text{ DLH} \end{aligned}$$

\]

Compute the overhead volume variance

\[

$$\begin{aligned} &\text{Budgeted Fixed Overhead} = \$53,000 \\ &\text{Applied Fixed Overhead} = 24,400 \text{ DLH} \times \$2.00 \text{ per DLH} = \$48,800 \\ &\text{Volume Variance} = \text{Budgeted Fixed Overhead} - \text{Applied Fixed Overhead} \\ &\text{Volume Variance} = \$53,000 - \$48,800 = \$4,200 \quad \text{(Unfavorable)} \end{aligned}$$

\]
</reasoning>

<answer>
\[

$$\begin{aligned} &\text{Budgeted Fixed Overhead} && \$53,000 \\ &\text{Applied Fixed Overhead} && \$48,800 \\ &\text{Volume Variance} && \$4,200 \quad \text{Unfavorable} \end{aligned}$$

\]
</answer>

<post_analysis>
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"question_type": "Fill-in-the-blank",
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"Business",
"Accounting",
"Overhead Variance Analysis"
]
}
</post_analysis>

Answer:

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"new_concepts": [],
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<reasoning>

Calculate standard overhead rates per direct labor hour (DLH)

\[

$$\begin{aligned} &\text{Budgeted DLH at } 80\% \text{ capacity} = 53,000 \text{ units} \times 0.5 \text{ DLH/unit} = 26,500 \text{ DLH} \\ &\text{Standard Variable Overhead Rate (SVR)} = \frac{\$291,500}{26,500 \text{ DLH}} = \$11.00 \text{ per DLH} \\ &\text{Standard Fixed Overhead Rate (SFR)} = \frac{\$53,000}{26,500 \text{ DLH}} = \$2.00 \text{ per DLH} \end{aligned}$$

\]

Determine standard hours allowed for actual production

\[

$$\begin{aligned} &\text{Standard hours allowed (SHA)} = 48,800 \text{ units} \times 0.5 \text{ DLH/unit} = 24,400 \text{ DLH} \end{aligned}$$

\]

Compute the overhead volume variance

\[

$$\begin{aligned} &\text{Budgeted Fixed Overhead} = \$53,000 \\ &\text{Applied Fixed Overhead} = 24,400 \text{ DLH} \times \$2.00 \text{ per DLH} = \$48,800 \\ &\text{Volume Variance} = \text{Budgeted Fixed Overhead} - \text{Applied Fixed Overhead} \\ &\text{Volume Variance} = \$53,000 - \$48,800 = \$4,200 \quad \text{(Unfavorable)} \end{aligned}$$

\]
</reasoning>

<answer>
\[

$$\begin{aligned} &\text{Budgeted Fixed Overhead} && \$53,000 \\ &\text{Applied Fixed Overhead} && \$48,800 \\ &\text{Volume Variance} && \$4,200 \quad \text{Unfavorable} \end{aligned}$$

\]
</answer>

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"Business",
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