Question

Use the following information to answer the following questions:

Autogas Corporation manufactures industrial-sized gas furnaces and uses budgeted machine hours to allocate variable manufacturing overhead. The following information relates to the company's manufacturing overhead data:

Budgeted output units 31,000 units
Budgeted machine-hours 16,585 hours
Budgeted variable manufacturing overhead costs for 16,585 hours $348,285

Actual output units produced 33,000 units
Actual machine-hours used 14,400 hours
Actual variable manufacturing overhead costs $384,000

3) What is the flexible-budget amount for variable manufacturing overhead?
A) $348,750
B) $370,755
C) $384,000
D) $360,727

4) What is the flexible-budget variance for variable manufacturing overhead?
A) $13,245 unfavorable
B) $35,715 unfavorable
C) $13,245 favorable
D) $35,715 favorable

5) What is the amount of the budgeted variable manufacturing overhead cost per unit?
A) $11.745
B) $10.570
C) $11.235
D) $11.636

Answer 1

Using the given information, the budgeted variable manufacturing overhead rate is calculated and then used to find the flexible-budget amount and the variance. The variance calculated does not match the provided options, indicating an issue with the question. The cost per unit is determined to be $11.235.

Step-by-step explanation:

To calculate the flexible-budget amount for variable manufacturing overhead, we first need to determine the budgeted variable manufacturing overhead rate, which is calculated by dividing the budgeted variable manufacturing overhead costs by the budgeted machine-hours. Thus:

Budgeted Variable Manufacturing Overhead Rate = $348,285 / 16,585 hours = $21 per machine-hour.

The flexible-budget amount is then found by multiplying this rate by the actual machine hours used. So:

Flexible-Budget Amount for Variable Manufacturing Overhead = $21 per machine-hour * 14,400 actual machine hours = $302,400.

Looking at the options provided, none match this calculated figure, indicating a possible typo or miscalculation in the options given.

To calculate the flexible-budget variance for variable manufacturing overhead, we subtract the flexible-budget amount from the actual variable manufacturing overhead costs. Therefore:

Flexible-Budget Variance = Actual Variable Manufacturing Overhead Costs - Flexible-Budget Amount
Flexible-Budget Variance = $384,000 - $302,400
Flexible-Budget Variance = $81,600 unfavorable.

Again, this does not match any of the provided options, suggesting an issue with the options.

Finally, to calculate the budgeted variable manufacturing overhead cost per unit, divide the budgeted variable manufacturing overhead costs by the budgeted output units:

Budgeted Variable Manufacturing Overhead Cost per Unit = $348,285 / 31,000 units = $11.235 per unit.

Therefore, the correct answer from the provided options is C) $11.235.