Lecture Managerial accounting for managers (4e) - Appendix 11A: Predetermined overhead rates and overhead analysis in a standard costing system - TRƯỜNG CÁN BỘ QUẢN LÝ GIÁO DỤC THÀNH PHỐ HỒ CHÍ MINH

FPOHR = Fixed portion of the predetermined overhead rate DH = Denominator hours. SH = Standard hours allowed for actual output[r]

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Susan Coomer Galbreath, Ph.D., CPA Charles W Caldwell, D.B.A., CMA Jon A Booker, Ph.D., CPA, CIA Cynthia J Rooney, Ph.D., CPA

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Predetermined Overhead

Rates and Overhead Analysis

in a Standard Costing System

Appendix 11A

Learning Objective 11-4

Compute and interpret

the fixed overhead volume and budget

variances.

Volume variance

Variance

Fixed

Overhead

Applied

Actual Fixed Overhead

Budgeted Fixed Overhead

Volume

variance

Fixed overhead applied to work in process

Budgeted fixed overhead

FPOHR = Fixed portion of the predetermined overhead rate

DH = Denominator hours

SH = Standard hours allowed for actual output

SH × FR DH × FR

Fixed Overhead Volume

Variance

Volume variance = FPOHR × (DH – SH)

Fixed

Overhead

Applied

Actual Fixed Overhead

Budgeted Fixed Overhead

Volume variance

Budget variance

Variance

Budget

variance

Budgeted fixed overhead

Actual fixed overhead

Fixed

Overhead

Applied

Actual Fixed Overhead

Budgeted Fixed Overhead

Predetermined Overhead Rates

Predetermined

overhead rate

Estimated total manufacturing overhead cost Estimated total amount of the allocation base

=

Predetermined

overhead rate

$360,000 90,000 Machine-hours

=

Predetermined

Predetermined Overhead Rates

Variable component of the

predetermined overhead rate

$90,000 90,000 Machine-hours

=

Variable component of the

Fixed component of the

predetermined overhead rate

$270,000 90,000 Machine-hours

= Fixed component of the