2 . Atlantic Company has the following monthly flexible budget information based on an expectation of...

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Accounting

2 . Atlantic Company has the following monthly flexible budgetinformation based on an expectation of operating at 80% of thefactory’s capacity or 10,000 units produced:
Operating Levels
70% 80% 90%
Budgeted output in units 8,000 10,000 12,000
Budgeted labor (standard hours) 16,000 20,000 24,000
Budgeted overhead
Variable overhead $ 48,000 $60,000 $ 72,000
Fixed overhead 40,000 40,000 40,000
Total overhead $ 88,000 $100,000 $112,000
During the current month, the company operated at 70% ofcapacity and employees worked 16,500 hours and the flowing actualoverhead costs were incurred:
Variable overhead $ 47,300
Fixed overhead 41,000
Total overhead $88,300
Required:
Compute the predetermined overhead rate per direct labor hourfor variable overhead, fixed overhead, and total overhead.
Compute the variable overhead spending and efficiencyvariances.
Compute the fixed overhead spending and volume variance

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Solution 1 Predetermined variable overhead rate Budgeted variable overhead at 80 capacity Budgeted labor hours 60000 20000 3 per hour Predetermined fixed overhead rate Budgeted fixed overhead Budgeted See Answer

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Transcribed Image Text

2 . Atlantic Company has the following monthly flexible budgetinformation based on an expectation of operating at 80% of thefactory’s capacity or 10,000 units produced:Operating Levels70%80%90%Budgeted output in units8,00010,00012,000Budgeted labor (standard hours)16,00020,00024,000Budgeted overheadVariable overhead$ 48,000$60,000$ 72,000Fixed overhead40,00040,00040,000Total overhead$ 88,000$100,000$112,000During the current month, the company operated at 70% ofcapacity and employees worked 16,500 hours and the flowing actualoverhead costs were incurred:Variable overhead$ 47,300Fixed overhead41,000Total overhead$88,300Required:Compute the predetermined overhead rate per direct labor hourfor variable overhead, fixed overhead, and total overhead.Compute the variable overhead spending and efficiencyvariances.Compute the fixed overhead spending and volume variance

	Operating Levels
	70%	80%	90%
Budgeted output in units	8,000	10,000	12,000
Budgeted labor (standard hours)	16,000	20,000	24,000
Budgeted overhead
Variable overhead	$ 48,000	$60,000	$ 72,000
Fixed overhead	40,000	40,000	40,000
Total overhead	$ 88,000	$100,000	$112,000

Variable overhead	$ 47,300
Fixed overhead	41,000
Total overhead	$88,300