Manufacturing Overhead Accounting: Actual and Applied - This variance is the difference between the actual

manufacturing overhead incurred and the applied

Factory Overhead Variance manufacturing overhead.
- the difference between the actual factory overhead as
shown by factory overhead control account and the overhead Spending Variance
charged to production as shown by the factory overhead Actual overhead xxx
applied account. Less:Budgeted Overhead
based on
Applied Overhead < Actual Cost - Overapplied capacity used
Applied Overhead> Actual Cost - Underapplied Fixed xx
Variable xx xxx
Budgeted manufacturing OH: Spending variance xxxx
Fixed overhead cost
+ Variable overhead cost Volume Variance xxx
Total Budgeted OH Spending variance xxx
Net Variance (favorable/Unfavorable) xxxx
Total Budgeted OH
(Direct Labor Hours) - if DLH is = Predetermined OH Variance Analysis
rate per hour
the basis Actual cost>costs applied to production = Unfavorable
Actual cost<costs applied to production = Favorable
Applied Manufacturing OH
Actual Manufacturing OH
Underapplied/Overapplied Manufacturing OH
1. Rolex Corporation estimates that its production for the
Causes of the manufacturing overhead variance coming year
will be 10,000 units, which is 80% of normal capacity, with
Volume Variance the follo-
- This variance measures the amount by which actual wing costs:
overhead is more or less than the amount that should have
been spent for the activity attained. Materials P40
Direct Labor 60
Volume Variance:
Fixed overhead applied Direct labor is paid at the rate of P24 per hour. The
Fixed overhead budgeted (actual) machine should
Volume Variance (favorable/unfavorable) be run for 20 minutes to produce one unit. Total estimated
OH is ex-
pected to consist of P400,000 for variable overhead and
P400,000
for fixed overhead.

Spending Variance What is the predetermined overhead rate base on units of

This study source was downloaded by 100000865526114 from CourseHero.com on 04-13-2023 20:51:56 GMT -05:00
 production using the expected actual capacity activity
level? 6. Using the data in No. 1, what is the overhead rate base on
units of production using the normal capacity activity level?
a. P80 per unit
b. P75 per unit a. P64 per unit
c. P65 per unit b. P70 per unit
d. P85 per unit c. P75 per unit
d. P80 per unit
2. Using the data in No. 1 what is the predetermined
overhead rate base on material cost? 7. Using the data in No. 1, what is the overhead rate base on
material
a. 200% cost using the normal capacity activity level?
b. 150%
c. 250% a. 160%
d. 300% b. 155%
c. 165%
3. Using the data in No. 1, what is the predetermined d. 200%
overhead rate
base on direct labor cost? 8. Using the data in No. 1, what is the overhead rate base on
machine hours using the normal capacity activity level?
a. 133%
b.. 153% a. P92
c. 166% b. P85
D. 113% c. P75
d. P60
4. Using the data in No. 1, what is the predetermined
overhead rate
base on direct labor hours?

a. P32 per direct labor hour

b. P35 per direct labor hour
c. P40 per direct labor hour
d. P45 per direct labor hour
Data for the past two years for J & J Company are:

5. Using the data in No. 1, what is the predetermined 2013 2014

overhead rate base on machine hours? Units produced 10,000 11,500
Overhead applied P 15 P 18
a. P2.40 per machine hour per unit
b. P3.00 per machine hour Actual Overhead:
c. P3.50 per machine hour Fixed 50,000 55,000
d. P4.00 per machine hour

This study source was downloaded by 100000865526114 from CourseHero.com on 04-13-2023 20:51:56 GMT -05:00
 Variable 95,000 150,000 a. P10,086
Estimated b. P15,086
overhead c. P 8,733
Fixed 50,000 56,000 d. P 7,833
Overhead 130,000 142,000
13. Using the data in No. 12, what is over or underapplied
The company determines overhead rates based on estimated manufacturing for March?
units to be produced.
a. P1,086 underapplied
9. What are the estimated units of production used to obtain b. P1,086 overapplied
the overhead allocation rates 2013 and 2014? c. P 267 underapplied
d. P 267 overapplied

2013 2014 14. The normal capacity for Maria Company is 36,000 machine
a. 12,000 11,000 hours with fixed manufacturing overhead budgeted at P16,920
b. 11,000 12,000 and an estimated variable manufacturing overhead rate of
c. 12,000 13,000 P2.10 per hour.
d. 11,000 13,000 During July, actual production required 2,700 machine
hours,with a total overhead of P7,800.
10. What is the overapplied (underapplied) overhead in 2013?
What is the applied manufacturing overhead?
a. P(5,000)
b. P5,000 a. P20,898
c. P7,000 b. P19,290
d. P(7,000) c. P6,939
d. P9,639
11. What is the overapplied (underapplied) overhead in 2014?
15. Using the data in No. 14, what is the over or underapplied
a. P7,000 manufacturing overhead for July?
b. P(7,000)
c. P5,000 a. P13,098 overapplied
d. P(5,000) b. P13,098 underapplied
c. P 861 underapplied
d. P 861 overapplied

12. The normal annual capacity for Nena Company is 48,000

units with production rates being level throughout the year.
The March budget shows fixed manufacturing overhead of
P1,440 and an estimated variable manufacturing overhead Selected data for the Palawan Manufacturing Company for the
rate of P 2.10 per unit. During March, Actual output was 4,100 year 2014 follow:
units, with a total manufacturing overhead of P9,000.
Budgeted for Year Actual for Year

This study source was downloaded by 100000865526114 from CourseHero.com on 04-13-2023 20:51:56 GMT -05:00
 Direct Labor hous 260,000 248,000 application rate for 2014 is P8.60 per hour, based on
Manufacturing anticipated fixed costs of P348,000 and anticipated variable
Overhead costs of P684,000 with an expected volume of 120,000 labor
Fixed P 585,000 P 578,400 hours.
Variabe 1,092,000 1,039,940
Total P1,677,000 P 1, 618,340 During the year, the company actually operated for 115,800
hours, incurring fixed overhead of P348,000 and variable
overhead of P637,880.
16. What is the over or underapplied overhead for the year?
20. What is the under or overapplied manufacturing overhead
a. P 16,805 overapplied for the year?
b. P16,805 underapplied
c. P15,800 overapplied a. 10,500 underapplied
d. P15,800 underapplied b. P10,500 overapplied
c. P10,000 underapplied
17. What is the fixed volume variane? d. P10,000 overapplied

a. P26, 325 favorable

b. P26,325 unfavorable 21. What is the fixed volume variance?
c. P36,325 favorable
d. P36, 325 unfavorable a. P12,180 favorable
b. P12,180 unfavorable
18. What is the spending variance? c. P15,180 favorable
d. P15,180 unfavorable
a. P8,500 favorable
b. P8,500 unfavorable 22. What is the spending variance?
c. P9,520 favorable
d. P9,520 unfavorable a. P22,180 favorable
b. P22,180 unfavorable
19. What is the net variance? c. P32,180 favorable
d. P32,`180 unfavorable
a. P16,805 favorable
b. P16,805 favorable 23. What is the total variance?
c. P15,800 favorable
d. P15,800 unfavorable A. P10,000 unfavorable
B.P10,000 favorable
C.P24,360 favorable
D.P24,360 unfavorable

Bestman Clothing Company uses the direct labor hours

method for applying manufacturing overhead. The overhead

This study source was downloaded by 100000865526114 from CourseHero.com on 04-13-2023 20:51:56 GMT -05:00
 Answers: 12. A. Actual output 4,100 units
Overhead rate:
1. A.
P80 per unit = P800/10,000 units Fixed overhead rate: P1,400/(48,000/12) = P0.36
2. A.
200% of material cost -= P800,000/P400,000 Variable overhead rate: 2.10
3. A.
133% of direct labor cost = P800,000/P600,000 P2.46
4. A.
P32 per direct labor hour = P800,000/25,000 Applied manufactuing overhead
*P600,000/P24 = 25,000 P10,086
estimated direct labor hour. 4,100x2.46
5. A. 2.40 per machine hour = P800,000/3.333
*20 minutes/60 minutes = 1/3 machine
hour per unit
1/3 hour per unit x 10,000 unit x 10,000 units = 3.333
estimated machine hours. 13. A. Applied manufacturing overhead P10,086
6. A. P64 overhead per unit Actual manufacturing overhead 9,000
*10,000 units/80% = 12,500 Overapplied manufacturing overhead
P1,086
7. A 160% of material cost = P800,000/P500,000
*P40 x 12,500 units 14. C Actual production 2,700 hours
Overhead rate
8. A.P92 per machine hour = P800,000/(1/3 hour x 12,500 Fixed overhead rate:(P16,920/12)/
units) (36,000/12) P 0.47
Variable overhead rate: 2.10
9. A. - 2009: P180,000/P15 = 12,000 estimated units of 2.57
production Applied manufactuing overhead P6,939
a) -2010 P198,000/P18= 11,000 esimated units of
production 15. C. Actual manufacturing overhead P7,800
Applied manufacturing overhead 6,939
10. B. Applied factory overhead (P10,000 units x P15 ) Underapplied manufacturing overhead
P150,000 P 861
Actual factory overhead (P50,000+P95,000)
145,000 16. A. Actual manufacturing overhead
Overapplied overhead P P1,618,340
5,000 Applied manufacturing overhead
1,601,535
11. B Actual factory overhead (P55,000 = P150,000) (248,300 DLH x 6.45)
P205,000 Underapplied overhead
Applied factory overhead(11,000 units x P18) P16,805
198,000 (P1,677,000/260,000 DLH = P 6.45
Underapplied overhead per DLH
7,000

17. B. Budgeted fixed overhead P 585,000

This study source was downloaded by 100000865526114 from CourseHero.com on 04-13-2023 20:51:56 GMT -05:00
 Applied fixed overhead 558,675 P1,008,060
(248,300 DLH x 2.25) Per DLH)
Volume Variance P 26,325 Actual Overhead
985,880
18. C. Budgeted overhead Spending variance P 22,180
Fixed overhead P585,000
Variable overhead P1,042,860 (P684,000/120,000 DLH = P 5.70 per DLH)
P1,627,85
(248,300 x P4.20) 23. B Volume variance (U) P
Actual Manufacturing OH P 12,180
1,618,340 Spending variance (F)
Spending variance (f) P 22,180
9,520 Net overhead variance P
10,000
19. A. Volume variance (U) P
26,325
Spending variance (F) 9,520
Net overhead variance P
16,805

20. D. Actual overhead

Fixed P348,000
Variable 637,880 P98580
Applied overhead P10,000

21. B. Budgeted fixed overhead P

348,000
Applied fixed overhead
(115,800 x P2.90) 335,820
Volume Variance (U) P
12,180

(P348,000/120,000 DLH = 2.90 per DLH)

22. B. Budgeted overhead

Fixed overhead P348,000
Variable(115,800 x P5.7 660,060

This study source was downloaded by 100000865526114 from CourseHero.com on 04-13-2023 20:51:56 GMT -05:00
Powered by TCPDF (www.tcpdf.org)