Halt Company uses a standard cost system and applies manufacturing overhead to products on the basis of machine hours. The following information is available for the year just ended:
Standard variable-overhead rate per machine hour: $2.50
Standard fixed-overhead rate per machine hour: $5.00
Planned activity during the period: 30,000 machine hours
Actual production: 10,700 finished units
Production standard: Three machine hours per unit
Actual variable overhead: $86,200
Actual total overhead: $225,500
Actual machine hours worked: 35,100
Required:
A. Calculate the budgeted fixed overhead for the year.
B. Did Halt spend more or less than anticipated for fixed overhead? How much?
C. Was variable overhead under- or overapplied during the year? By how much?
D. Was Halt efficient in its use of machine hours? Briefly explain.
E. Would the company's efficiency or inefficiency in the use of machine hours have any effect on Halt's overhead variances? If "yes," which one(s)?

Question

Halt Company uses a standard cost system and applies manufacturing overhead to products on the basis of machine hours. The following information is available for the year just ended:
Standard variable-overhead rate per machine hour: $2.50
Standard fixed-overhead rate per machine hour: $5.00
Planned activity during the period: 30,000 machine hours
Actual production: 10,700 finished units
Production standard: Three machine hours per unit
Actual variable overhead: $86,200
Actual total overhead: $225,500
Actual machine hours worked: 35,100
Required: 
A. Calculate the budgeted fixed overhead for the year.
B. Did Halt spend more or less than anticipated for fixed overhead? How much?
C. Was variable overhead under- or overapplied during the year? By how much?
D. Was Halt efficient in its use of machine hours? Briefly explain.
E. Would the company's efficiency or inefficiency in the use of machine hours have any effect on Halt's overhead variances? If "yes," which one(s)?

Quizplus · Accepted Answer

The Answer of Halt Company uses a standard cost system and applies manufacturing overhead to products on the basis of machine hours. The following information is available for the year just ended:
Standard variable-overhead rate per machine hour: $2.50
Standard fixed-overhead rate per machine hour: $5.00
Planned activity during the period: 30,000 machine hours
Actual production: 10,700 finished units
Production standard: Three machine hours per unit
Actual variable overhead: $86,200
Actual total overhead: $225,500
Actual machine hours worked: 35,100
Required: 
A. Calculate the budgeted fixed overhead for the year.
B. Did Halt spend more or less than anticipated for fixed overhead? How much?
C. Was variable overhead under- or overapplied during the year? By how much?
D. Was Halt efficient in its use of machine hours? Briefly explain.
E. Would the company's efficiency or inefficiency in the use of machine hours have any effect on Halt's overhead variances? If "yes," which one(s)?

Halt Company Uses a Standard Cost System and Applies Manufacturing