Lindon Company”s flexible budget for variable manufacturing overhead is given below:
Cost |
||||
Formula |
6,000 |
8,000 |
10,000 |
|
Overhead costs |
per DLH |
DLHs |
DLHs |
DLHs |
Supplies |
$0.20 |
$1,200 |
$1,600 |
$2,000 |
Indirect labor |
0.50 |
3,000 |
4,000 |
5,000 |
Utilities |
0.05 |
300 |
400 |
500 |
Total overhead cost |
$0.75 |
$4,500 |
$6,000 |
$7,500 |
During a recent period, the company produced 2,500 units of product using 7,600 direct labor hours (DLHs). The standard allows 3 direct labor hours per unit. Actual variable overhead costs incurred were:
Supplies |
$1,900 |
Indirect labor |
3,040 |
Utilities |
570 |
Total overhead cost |
$5,510 |
The company had originally budgeted to produce 2,600 units during the period using 7,800 direct labor hours.
Required:
Prepare a performance report for the period showing only the spending variances for each overhead cost category.
120. The following overhead data are for a department in a large company.
Actual Costs |
Static |
|
Incurred |
Budget |
|
Activity level (in units) |
400 |
380 |
Variable costs: |
||
Indirect materials |
$9,050 |
$8,132 |
Power |
$2,540 |
$2,394 |
Fixed costs: |
||
Administration |
$5,080 |
$5,100 |
Rent |
$8,590 |
$8,600 |
Required:
Prepare a report that would be useful in assessing how well costs were controlled in this department.