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The Milling Department uses standard machine hours to allocate overhead to products. Budgeted volume for the year was 36,000 machine hours. A flexible budget is used to set the overhead rate. Fixed overhead is budgeted to be $720,000 and variable overhead is estimated to be $10 per machine hour During the year, two products are milled. The following table summarizes operations.

1.  The Milling Department uses standard machine hours to allocate overhead to products.
Budgeted volume for the year was 36,000 machine hours. A flexible budget is
used to set the overhead rate. Fixed overhead is budgeted to be $720,000 and
variable overhead is estimated to be $10 per machine hour
During the year, two products are milled. The following
table summarizes operations.

Product 1                                      Product 2

Units milled                                         10,500                                            12,000

Standard machine per unit                        2                                                   1
Actual machine hours used                    23,000                                             13,000

The actual overhead during the year was $1.1 million.

Calculate all the
relevant overhead variances for the department, and write a memo that describes
what each one means.

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