Solutions to exercises 16.12 Fixed manufacturing overhead, variance analysis. (20 min) 1 Budgeted fixed overhead rate per unit of allocation base = SFr62,400 1,040 4 × [AQ15]
= 62,400 4,160
= SFr 15 per hour Actual costs incurred Same lump sum regardless of output level Same lump sum regardless of output level Allocated (Budgeted input allowed for actual output achieved × Budgeted rate) SFr 63,916 SFr 62,400 SFr 62,400 (4 × 1,080 × SFr 15) SFr 64,800
SFr 1,516 U
SFr 2,400 F Spending variance Never a variance Production-volume variance
SFr 1,516 U SFr 2,400 F
Flexible-budget variance Production-volume variance The fixed manufacturing overhead spending variance and the fixed manufacturing overhead variance are the same – SFr 1,516 U. Lavertezzo spent SFr 1,516 above the SFr 62,400 budget amount for June 2011. 2 The production volume variance is SFr 2,400 F. This arises because the actual production of 1,080 suits exceeds the budgeted 1,040 suits. This results in overallocated fixed manufacturing overhead of SFr 2,400 (4 × 40 × SFr 15). 1,040 × 4 = 4,160
