(Combined overhead rates) Rocky Mountain Industries manufactures a downfilled sleeping bag with the following standard cost information for 2001:
• Each sleeping bag requires 1 hour of machine time to produce.
• Variable overhead: $9 per machine hour
• Fixed overhead: $12 per machine hour; calculated as total budgeted overhead divided by expected annual capacity of 30,000 machine hours
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Production Statistics for 2001: |
|
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Number of sleeping bags produced |
31,000 units |
|
Actual machine hours |
33,300 hours |
|
Variable overhead cost incurred |
$266,400 |
|
Fixed overhead cost incurred |
$353,500 |
a. Using a combined overhead rate, calculate variances according to the two variance approach.
b. Using a combined overhead rate, calculate variances according to the three variance approach.