Required: 2. Complete the performance report that will help Mr. Weston's superiors assess how well costs were controlled in the machining department. (Do not round your intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
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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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- As an assistant cost accountant for Firewall Industries, you have been assigned to review the activity base for the predetermined factory overhead rate. The president, JoJo Gunn, is concerned about the wide fluctuation in the amount of over- or underapplied overhead in recent years. An analysis of the company's operations and use of the current overhead rate (direct labor cost) has narrowed the possible alternative overhead bases to direct labor cost and machine hours. For the past five years, the following data have been gathered: ww mwwwww M M w Year 5 Year 4 Year 3 Year 2 Year 1 Actual overhead $ 790,000 $ 870,000 $ 935,000 $ 845,000 $ 760,000 Applied overhead 777,000 882,000 924,000 840,000 777,000 (Over-) underapplied overhead $ 13,000 $ (12,000) %24 $ 11,000 5,000 $ (17,000) Direct labor cost $3,885,000 $4,410,000 $4,620,000 $4,200,000 $3,885,000 Machine hours 93,000 104,000 111,000 100,400 91,600 8,49 840,000 1. Calculate a predetermined factory overhead rate for each…As an assistant cost accountant for Mississippi Industries, you have been assigned to re- view the activity base for the predetermined factory overhead rate. The president, Tony Favre, has expressed concern that the over- or underapplied overhead has fluctuated excessively over the years. An analysis of the company's operations and use of the current overhead rate (direct labor cost) has narrowed the possible alternative overhead bases to direct labor cost and machine hours. For the past five years, the following data have been gathered: 2014 2013 2012 2011 2010 $ 790,000 777,000 $ 13,000 $ 870,000 $ 935,000 $ 760,000 777,000 $ (17,000) Actual overhead $ 845,000 Applied overhead (Over-) underapplied overhead 882,000 924,000 840,000 $ (12,000) $ 11,000 24 5,000 Direct labor cost $3,885,000 $4,410,000 $4,620,000 $4,200,000 $3,885,000 Machine hours 93,000 104,000 111,000 100,400 91,600Sagon Corporation has provided data concerning the Corporation's Manufacturing Overhead account for the month of September. Prior to the closing of the overapplied or underapplied balance to Cost of Goods Sold, the total of the debits to the Manufacturing Overhead account was $76,000 and the total of the credits to the account was $66,000. Which of the following statements is true? Multiple Choice Manufacturing overhead for the month was underapplied by $10,000. Manufacturing overhead transferred from Finished Goods to Cost of Goods Sold during the month was $76,000. Manufacturing overhead applied to Work in Process for the month was $76,000. Actual manufacturing overhead incurred during the month was $66,000.
- S Frank Weston, supervisor of the Freemont Corporation's Machining Department, was visibly upset after being reprimanded for his department's poor performance over the prior month. The department's cost control report is given below: FREEMONT CORPORATION-MACHINING DEPARTMENT Cost Control Report For the Month Ended June 30 Machine-hours Direct labour wages Supplies Maintenance Utilities Supervision Depreciation Total Actual 40,040 $ 86,100 24,290 145,800 17,740 41,400 83,400 $398,730 Static Budget 36,700 $ 84,410 22,020 142,670 17,070 41,400 83,400 $390,970 Static Budget Required: 1. This part of the question is not part of your Connect assignment. Variance $ 1,690 U 2,270 U 3,130 U 670 U 10 0 $ 7,760 U "I just can't understand all of these unfavourable variances," Weston complained to the supervisor of another department. "When the boss called me in, I thought he was going to give me a pat on the back because I know for a fact that my department worked more efficiently last month than…As an assistant cost accountant for Mississippi Industries, you have been assigned to review the activity base for the predetermined factory overhead rate. The president, Tony Favre, has expressed concern that the over- or underapplied overhead has fluctuated excessively over the years.An analysis of the company’s operations and use of the current overhead rate (direct labor cost) has narrowed the possible alternative overhead bases to direct labor cost and machine hours. For the past five years, the following data have been gathered: Attachment In teams:1. Calculate a predetermined factory overhead rate for each alternative base, assuming that rates would have been determined by relating the total amount of factory overhead for the past five years to the base.2. For each of the past five years, determine the over- or underapplied overhead based on the two predetermined overhead rates developed in part (1).3. Which predetermined overhead rate would you recommend? Discuss the basis for…Sagon Corporation has provided data concerning the Corporation's Manufacturing Overhead account for the month of September. Prior to the closing of the overapplied or underapplied balance to Cost of Goods Sold, the total of the debits to the Manufacturing Overhead account was $73,000 and the total of the credits to the account was $55,000. Which of the following statements is true? Multiple Choice Manufacturing overhead transferred from Finished Goods to Cost of Goods Sold during the month was $73,000. Actual manufacturing overhead incurred during the month was $55,000. Manufacturing overhead applied to Work in Process for the month was $73,000. Manufacturing overhead for the month was underapplied by $18,000.
- Henderson Industries applies manufacturing overhead to its jobs based on a predetermined overhead rate, which is calculated using direct labor costs. The following data pertains to Henderson Industries' Work in Process inventory for the month of April: April 1 balance: $ 26,000 Debits during April: Direct Materials: $40,000 Direct Labor: $50,000 Manufacturing Overhead: $37, 500 Throughout April, the company's Work in Process inventory account received credits totaling $120, 500, representing the Cost of Goods Manufactured for the month. By April 30, only one job was still in process, having accumulated $9, 600 in applied overhead costs. The question is, what is the direct materials cost in this unfinished job? The options are: Group of answer choices $10, 600 $16, 700 $12, 800 $23, 400Frank Weston, supervisor of the Freemont Corporation's Machining Department, was visibly upset after being reprimanded for his department's poor performance over the prior month. The department's cost control report is given below: Machine-hours Direct labor wages Supplies Maintenance Utilities Supervision Depreciation Total Freemont Corporation-Machining Department Cost Control Report For the Month Ended June 30 Machine-hours Direct labor wages Supplies Maintenance Utilities Supervision Depreciation Total Actual Results 42,000 $ 89,600 28,300 25,000 22,700 55,000 95,000 $ 315,600 Actual Results Planning Budget $ 40,000 $ 86,800 25,600 22,900 21,500 55,000 95,000 $ 306,800 "I just can't understand all of these unfavorable variances," Weston complained to the supervisor of another department. "When the boss called me in, I thought he was going to give me a pat on the back because I know for a fact that my department worked more efficiently last month than it has ever worked before.…A review of the company's accounting records for the year just ended discovered the following: Farrina Manufacturing uses a predetermined overhead application rate of $8 per direct labor ho Underapplied manufacturing overhead: $7,200 Actual manufacturing overhead: $392.000 Budgeted labor hours: 50,000 Simone's actual labor hours worked totaled: O 49,100. O 49,900. 48.100. O 50.900. cannot be determined based on the information presented.
- The management of Casablanca Manufacturing Corporation believes that machine-hours is an appropriate measure of activity for overhead cost. Shown below are machine-hours and total overhead costs for the past six months: January February March April May June Machine- Hours 150,000 140,000 160,000 130,000 170,000 200,000 $319,500 $362,500 $400,000 Assume that the relevant range includes all of the activity levels mentioned in this problem. What is Casablanca's independent variable? Multiple Choice Overhead Cost $339,000 $328,000 $350, eeb the year the total overhead costLisa Ronsin had recently been transferred to the Home Security Systems Division of National Home Products. Shortly after taking over her new position as divisional controller, she was asked to develop the division’s predetermined overhead rate for the upcoming year. The accuracy of the rate is important because it is used throughout the year and any underapplied or overapplied overhead is closed out to Cost of Goods Sold at the end of the year. National Home Products uses direct labor-hours in all of its divisions as the allocation base for manufacturing overhead. To compute the predetermined overhead rate, Lisa divided her estimate of the total manufacturing overhead for the coming year by the production manager’s estimate of the total direct labor-hours for the coming year. She took her computations to the division’s general manager for approval but was quite surprised when he suggested a modification in the base. Her conversation with the general manager of the Home Security Systems…Lisa Ronsin had recently been transferred to the Home Security Systems Division of National Home Products. Shortly after taking over her new position as divisional controller, she was asked to develop the division’s predetermined overhead rate for the upcoming year. The accuracy of the rate is important because it is used throughout the year and any underapplied or overapplied overhead is closed out to Cost of Goods Sold at the end of the year. National Home Products uses direct labor-hours in all of its divisions as the allocation base for manufacturing overhead. To compute the predetermined overhead rate, Lisa divided her estimate of the total manufacturing overhead for the coming year by the production manager’s estimate of the total direct labor-hours for the coming year. She took her computations to the division’s general manager for approval but was quite surprised when he suggested a modification in the base. Her conversation with the general manager of the Home Security Systems…