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Question & Answer: Wilmington Composites, Inc., developed its overhead application rate from the annual budget. The budget is based…..

Wilmington Composites, Inc., developed its overhead application rate from the annual budget. The budget is based on an expected total output of 720,000 units requiring 3,600,000 machine hours. The company is able to schedule production uniformly throughout the year. The cost driver for overhead costs is machine hours.
     A total of 66,000 units requiring 315,000 machine hours were produced during March. Actual overhead costs for March amounted to $750,000. The actual costs, as compared to the annual budget and to one-twelfth of the annual budget, are as follows:

WILMINGTON COMPOSITES, INC.
Annual Budget
Total
Amount		 Per
Unit		 Per
Machine
Hour		 Monthly
Budget		 Actual
Costs
for March
  Variable overhead:
       Indirect material $ 2,448,000 $ 3.40 $ 0.68 $ 204,000 $ 222,000
       Indirect labor 1,800,000 2.50 0.50 150,000 150,000
  Fixed overhead:
       Supervision 1,296,000 1.80 0.36 108,000 102,000
       Utilities 1,080,000 1.50 0.30 90,000 108,000
       Depreciation 2,016,000 2.80 0.56 168,000 168,000
         Total $ 8,640,000 $ 12.00 $ 2.40 $ 720,000 $ 750,000
1. Prepare a schedule showing the following amounts for Wilmington Composites, Inc., for March.

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a. Applied overhead cost

b. Variable-overhead spending variance

c. Fixed-overhead budget variance

d. Variable-overhead efficiency variance

e. Fixed-overhead volume varianc

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Question & Answer: Wilmington Composites, Inc., developed its overhead application rate from the annual budget. The budget is based..... 1

Question & Answer: Wilmington Composites, Inc., developed its overhead application rate from the annual budget. The budget is based..... 2

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