Layt Clock Company has developed the following flexible budget for its overhead costs. Manufacturing overhead at Layt is applied to production on the basis of standard machine hours:
Machine Hours |
|||
21,600 |
24,000 |
26,400 |
|
Clocks produced |
18,000 |
20,000 |
22,000 |
Variable overhead cost |
$127,440 |
$141,600 |
$155,760 |
Fixed overhead cost |
$171,072 |
$171,072 |
$171,072 |
Layt was expecting to produce 22,000 clocks last year. The actual results for the year were as follows:
Number of clocks produced |
21,500 |
Machine hours incurred |
24,940 |
Variable overhead cost |
$145,899 |
Fixed overhead cost |
$170,540 |
Required:
Compute all four manufacturing overhead variances for Layt.