Trex by Rex produces back packs and fanny packs for the outdoorsenthusiast. Production costs include direct materials, directlabor, and manufacturing overhead - both fixed and variable. Thefollowing costs were budgeted for the year:
Fixed manufacturing overhead $187,200 Variable manufacturing overhead $1.10/direct labor hour Fixed selling and administrative $375,000
The backpacks are expected to require 2.5 direct labor hours andplanned production is 12,000 units. The fanny packs are expected torequire 1.8 direct labor hours and planned production is 18,000units.
The actual direct labor hours required in production for theyear were as follows:
Product Direct Labor Hours Used
Back Packs 34,060 DL hours Fanny Packs 16,250 DL hours
Overhead is applied to production using direct labor hours andthe actual manufacturing cost for the year was $270,500.
1. Calculate the manufacturing overhead rate used toapply overhead to production of both the back packs and the fannypacks.
2. What is the resulting over-or-under-absorb edoverhead for the year?
3. What does the over-or-under-absorbed overheadrepresent?
4. How will the over-or-under-absorbed overhead behandled iin the determination of the finals costs ofproducts?
THANK YOU!
Trex by Rex produces back packs and fanny packs for the outdoorsenthusiast. Production costs include direct materials, directlabor, and manufacturing overhead - both fixed and variable. Thefollowing costs were budgeted for the year:
| Fixed manufacturing overhead | $187,200 |
| Variable manufacturing overhead | $1.10/direct labor hour |
| Fixed selling and administrative | $375,000 |
The backpacks are expected to require 2.5 direct labor hours andplanned production is 12,000 units. The fanny packs are expected torequire 1.8 direct labor hours and planned production is 18,000units.
The actual direct labor hours required in production for theyear were as follows:
| Product | Direct Labor Hours Used |
| Back Packs | 34,060 DL hours |
| Fanny Packs | 16,250 DL hours |
Overhead is applied to production using direct labor hours andthe actual manufacturing cost for the year was $270,500.
1. Calculate the manufacturing overhead rate used toapply overhead to production of both the back packs and the fannypacks.
2. What is the resulting over-or-under-absorb edoverhead for the year?
3. What does the over-or-under-absorbed overheadrepresent?
4. How will the over-or-under-absorbed overhead behandled iin the determination of the finals costs ofproducts?
THANK YOU!
Related questions
Rogen Corporation manufactures a single product. The standard cost per unit of product is shown below.
| Direct materialsâ1 pound plastic at $6 per pound | $ 6.00 | |
| Direct laborâ2.00 hours at $11.15 per hour | 22.30 | |
| Variable manufacturing overhead | 14.00 | |
| Fixed manufacturing overhead | 18.00 | |
| Total standard cost per unit | $60.30 |
The predetermined manufacturing overhead rate is $16 per direct labor hour ($32.00 ÷ 2.00). It was computed from a master manufacturing overhead budget based on normal production of 12,000 direct labor hours (6,000 units) for the month. The master budget showed total variable costs of $84,000 ($7.00 per hour) and total fixed overhead costs of $108,000 ($9.00 per hour). Actual costs for October in producing 4,100 units were as follows.
| Direct materials (4,250 pounds) | $ 26,350 | |
| Direct labor (8,070 hours) | 92,402 | |
| Variable overhead | 99,710 | |
| Fixed overhead | 33,590 | |
| Total manufacturing costs | $252,052 |
The purchasing department buys the quantities of raw materials that are expected to be used in production each month. Raw materials inventories, therefore, can be ignored.
(a)
Compute all of the materials and labor variances. (Round answers to 0 decimal places, e.g. 125.)
(b)
Compute the total overhead variance.
