Question

Use the following information to answer the questions below:

Mynarc Corporation produces fertilizer and distributes the product by using his tanker trucks. Mynarc
uses budgeted fleet hours to allocate variable manufacturing overhead. The following information pertains to the company's manufacturing overhead data:

Budgeted output units 675 truckloads
Budgeted fleet hours 540 hours
Budgeted variable manufacturing overhead costs for 675 loads $82,350

Actual output units produced and delivered 630 truckloads
Actual fleet hours 436 hours
Actual variable manufacturing overhead costs $77,490

9) What is the flexible-budget amount for variable manufacturing overhead?
A) $83,025
B) $82,350
C) $76,860
D) $77,490

10) What is the flexible-budget variance for variable manufacturing overhead?
A) $4,860 favorable
B) $4,860 unfavorable
C) $630 favorable
D) $630 unfavorable

11) What is the budgeted variable manufacturing overhead cost per unit?
A) $183.00 per unit
B) $178.89 per unit
C) $119.25 per unit
D) $122.00 per unit

Answer 1

9) The flexible-budget amount for variable manufacturing overhead is A) $83,025.

10) The flexible-budget variance for variable manufacturing overhead is B) $4,860 unfavorable.

11) The budgeted variable manufacturing overhead cost per unit is D) $122.00 per unit

Therefore, correct options are 9) A) $83,025, 10) B) $4,860 unfavorable 11) D) $122.00 per unit

Step-by-step explanation:

9) To calculate the flexible-budget amount, use the actual output units produced and delivered (630 truckloads) and the budgeted variable manufacturing overhead cost for the original budgeted output units. The calculation is: $82,350 * (630/675) = $83,025.

10) The flexible budget adapts to activity level changes, enhancing cost assessment. Variance occurs when actual variable manufacturing overhead costs differ from the flexible budget. A $4,860 unfavorable variance signals exceeded budgeted costs, suggesting potential inefficiencies or unexpected increases.

11) The budgeted variable manufacturing overhead cost per unit is calculated by dividing the budgeted variable manufacturing overhead costs by the budgeted output units: $82,350 / 675 = $122.00 per unit.

Therefore, correct options are 9) A) $83,025, 10) B) $4,860 unfavorable 11) D) $122.00 per unit.