Chapter 12: Factory Over Head anlaysis

Direct Material
Direct Labor
FOH/MOH/manufacturing Cost/factory expense/manufacturing expense

1-Actual FOH indirect Material+indirect Labor+utilities+depreciation+supplies+insurance+maintainence factory+coal+p

2-Applied FOH Pre Determined Over Head= Estimated FOH/Estimated Base

Estimated Base 1-Unit Output FoH/units
2-Material Cost Foh/material cost
3-labor Cost FoH/labor Cost
4-Labor Hrs Foh/Labr Hrs
5-Machine Hrs Foh/Mach hrs

3-Budgeted/Estimated overhead
Total cost = Fixed Cost + Variable Cost
Total FOH = Fixed FOH +peru VFOH
nit
Fixed Cost remains Coe-g volume cost total cost
FFOH 200units 5 1000
350 2.86 1000
150 6.67 1000
variable cost is a cost that varies with the change in Prod Volume but remain Constant w.r.t per unit cost
VFOH 200 10 2000
350 10 3500
150 10 1500
ntainence factory+coal+power+gas+supervisor salaries+payroll taxes
Activity level selection
1-Theortical capacity unit 70000 1-over/under applied 2-Spending Capacity variance
2-Practical Capacity unit 65000
3-Expected Actual Capacity 60000
4-Normal Capacity 63000
Actual FOH Applied FOH Estimated FOH
Variances 3. idle capacity Variance
1- Over/Under applied Variance Actual FOH 160000 COGS
2-Spending Capacity variance Applied FOH 155000 FOH Contr A/c
Actual FOH XXXX 5000 Dr/under applied
Less:Budgeted FOH (XXX) Actual FOH 145000
FFOH -10000 Cr/over FOH Contr A/c
+ VFOH (rate * Actual Capacity)
Dr/unfav
Cr/Fav
3-Idle Capacity Variance
Estimated FOH XXX FFOH
VFOH(rate * Capacity)
Less:Applied FOH (xxx) (rate*Actual Capacity)
idle capacity Dr/unfav 1.POHR Normal
Cr/Fav 2. FFOH+VFOH Capacity
ng Capacity variance

pacity Variance
5000
FOH Contr A/c 5000

FOH Contr A/c 10000

COGS 10000
Problem 12-5
data:
Normal Capacity 60000 mach hrs
Expected Capacity 45000 hrs
VFOH 29250 0.65
FFOH 18000
Actual Capacity 47000
Actual FOH 49400

1) Pre deter rate (normal capacity)

POHR= FFOH+VFOH
18000+x

VFOH= 0.65
x VFOH= 39000
POHR= 57000
0.95
2) Pre determined rate (Expected actual Capacity)
POHR= FFOH+VFOH
47250
1.05
3) applied FOH
POHR rate @ normal capacity 0.95
applied FOH= 44650
4) applied FOH
POHR rate @ actual capacity 1.05
applied FOH= 49350
5) Idle Capacity Variance(normal Capacity)
Estimated FOH 48550 6) Idle Capacity Variance (expected actual
FFOH 18000 Estimated FOH
VFOH 30550 FFOH
Less: Applied FOH 44650 VFOH
(.95*47000) less: Applied FOH
3900 unfav (1.05*47000)

7) Spending Variance ( normal) Spending (expected capacity)

Actual FOH 49400 Actual FOH 49400
Less: less: Budgeted FOH 48550
Estimated FOH 48550 FFOH 18000
FFOH 18000 VFOH 30550
VFOH 30550 850
850 unfav
city Variance (expected actual capacity)
48550
18000
30550
49350

-800 fav

un FaV
Estimated FOH 276000
Units 47500
Material 400000
Labr hrs 28750 Per Lbr Hr 9.6 Direct Labor 276000
Mach Hrs 23000

POHR (unit) 5.810526

POHR (Mat) 0.69
POHR (Lab Hrs) 9.6
POHR (Lab Cost) 1
POHR (Mach HRs) 12
Normal Capacity 50000 DLhrs
Actual Capacity 43000 DLhrs
Budgeted Capaci 40000 Hrs
Fixed FOH 200000
Var.FOH 6.69 /Dl Hrs 2a FOH Rate=

1a Total FOH Rate FFOH + VFOH

FOH Rate= x + 6.69 2b Fixed FOH= FFOH/Actua
4+ 6.69 10.69
1b Fixed FOH
x = Fixed FOH/Normal Capacity
4
1C Idle Capacity Variance
Estimated FOH 487670
FFOH 200000
+ VFOH 287670
Less: Applied FOH 459670 -459670
Variance 28000 Unfavourable
FFOH + VFOH
x + 6.69
4.6511 + 6.69 11.341
4.651163
Normal Annual Capacity 36000 Lab Hrs 3000 Monthly Annual Capacity
Fixed Factoryover Head ($) 16920 yearly 1410 Monthly FFOH
Variable FOH ($) per unit 2.1
Actual Production 2700 Lbr Hrs
Total FOH (Actual)$ 7959

1 Applied FOH= FFOH + VFOH

0.47 + 2.1 2.57
Calculation
FFOH 0.47

2 Spending Capacity Variance

Actual FOH 7959
Less:Budgeted FOH 7080
FFOH 1410
VFOH 5670
(Vfoh rate*act Cap)
Variance 879 Dr/Unfavorable/underapplied
3 Idle Capacity Variance
Estimated FOH 7080
FFOH 1410
VFOH 5670
Less:Applied FOH 6939
(total rate*act Cap)
Variance 141 Unfavourable
FFOH
check: Annual Normal C 3000 0.47
Actual Capacity 2700 0.52
Diff 300
141
POHR 3
Estimated FOH 600000 1-Spending
Estimated mach Hrs 200000 Actual FOH 631000
VFOH 1 less:Budgeted 610000
FFOHrate*
Normal
FFOH 2 Cap FFOH 400000
VFOHrate*
Actual capacity 210000 Act Cap VFOH 210000
Actual FOH 631000 Var 21000 Unfavourable

2-Idle Capacity
Budgeted FOH 610000
FFOH 400000
(+VFOH 210000
less:Applied FOH 630000 Check Norm 200000
Total FOH rate*Act Cap) Act 210000
Var -20000 Fav -10000
-20000
Unfavourable

2
(1)   F-O-H applied = Actual capacity × F-O-H applied rate
= 105,000 × 2.55
= $ 267750
F-O-H applied rate = 255,000 / 100,000
= $ 2.55 /- hr
(2)   Over or under applied F-O-H:
Actual F-O-H 270,000
Less: F-O-H applied 267750
Unfavorable / under applied 2250