Question Details

Michaels Company applies overhead to production 



1.During November, Heim Company allocated overhead to products at the rate of $26.00 per direct labor
hour. This figure was based on 80% of capacity or 1,600 direct labor hours. However, Heim Company
operated at only 70% of capacity, or 1,400 direct labor hours. Budgeted overhead at 70% of capacity
is $38,900, and overhead actually incurred was $38,000. What is the company's volume variance for
November? (Indicate whether the variance is favorable or unfavorable)



2.Selected information from Michaels Company's flexible budget is presented

                                                                               
                                                                                                 Operating Levels                        .                           
                                                                                      80%		  90%		  100%
Budgeted production in units                                       4,800		  5,400		  6,000
Budgeted labor (standard hours)                                  9,600		 10,800	 12,000
Budgeted overhead:                                     
Variable overhead                                                      $86,400	$97,200	$108,000
Fixed overhead                                                           63,600		  63,000	  63,600
below:
Michaels Company applies overhead to production at a rate of $31.25 per unit based on a normal
operating level of 80% of capacity. For the current period, Michaels Company produced 5,400 units and
incurred $62,000 of fixed overhead costs and $96,000 of variable overhead costs. The company used
11,000 labor hours to produce the 5,400 units. Calculate the variable overhead spending and efficiency
variances, and the fixed overhead spending and volume variances. Indicate whether each variance is
favorable or unfavorable.
Variable overhead




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