Ch 9 Homework Question 1-4 25.00 points Lamp Light Limited (LLL) manufactures la

Question

Ch 9 Homework

Question 1-4

25.00 points Lamp Light Limited (LLL) manufactures lampshades. It applies variable overhead on the basis of direct labor hours. Information from LLL's standard cost card follows: Standard Standard Standard QuantityRt Unit Variable manufacturing 0.6 $0.80 S0.48 overhead During August, LLL had the following actual results Units produced and sold Actual variable overhead Actual direct labor hours 23,100 $ 9,490 16,000 Lamp Light Limited (LLL) calculates a fixed overhead rate based on budgeted fixed overhead of $84,400 and budgeted production of 21,100 units. Actual results were as follows: Number of units produced and sold Actual fixed overhead 23,100 S 82,400 Required 1. Calculate the fixed overhead rate based on budgeted production for LLL. (Round your answer to 2 decimal places.) Fixed Overhead Rate per unit 2. Calculate the fixed overhead spending variance for LLL. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.) Fixed Overhead Spending Variance 3. Calculate the fixed overhead volume variance for LLL. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable. Round Fixed overhead rate to 2 decimal places.) Fixed Overhead Volume Variance 4. Calculate the over- or underapplied fixed overhead for LLL Fixed overhead

Explanation / Answer

SOLUTION

(A) Fixed overhead rate = Budgeted fixed overhead / Budgeted production

= $84,400 / 21,100 = $4

(B) Fixed Overhead Spending Variance = Budgeted Fixed Overhead – Actual Fixed Overhead

Fixed Overhead Spending Variance = $84,400 - $82,400 = $2,000 (F)

(C) Fixed Overhead Volume Variance = FOH Rate * (Actual Volume – Budgeted Volume)

Fixed Overhead Volume Variance = $4 * (23,100 - 21,100)

= $8,000 (F)

(D) Total fixed overhead variance = $2,000 + $8,000 = $10,000 F (overapplied)

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