BEC Becker question that i dont understand

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    Topic
  • #198747
    NYaccountingstudent
    Participant

    I posted two questions from Becker below this. How come one question uses actual overhead of 100,000 hours to come up with the budgeted overhead. and another question uses the actual 94,000 to come up with the budgeted overhead.

    I knwo my question might be confusing so i put an arrow to the two numbers im talking about


    >

    Water Control, Inc. manufactures water pumps and uses a standard cost system. The standard factory overhead costs per water pump are based on direct labor hours and are shown below:

    Variable overhead (4 hours at $8/hour) $ 32
    Fixed overhead (4 hours at $5*/hour) 20
    Total overhead cost per unit $ 52

    *Based on a capacity of 100,000 direct labor hours per month.
    The following additional information is available for the month of November.

    22,000 pumps were produced although 25,000 had been scheduled for production.
    94,000 direct labor hours were worked at a total cost of $940,000.
    The standard direct labor rate is $9 per hour.
    The standard direct labor time per unit is four hours.
    Variable overhead costs were $740,000.
    Fixed overhead costs were $540,000.
    The fixed overhead spending variance for November was:

    a.
    $240,000 unfavorable.
    b.
    $70,000 unfavorable.
    c.
    $15,000 favorable.
    d.
    $40,000 unfavorable.

    Actual fixed overhead $ 540,000
    Budgeted fixed overhead (


    >100,000 DL hrs. × $5/hr.) 500,000
    Unfavorable variance $ 40,000

    question 2

    Water Control, Inc. manufactures water pumps and uses a standard cost system. The standard factory overhead costs per water pump are based on direct labor hours and are shown below:

    Variable overhead (4 hours at $8/hour) $ 32
    Fixed overhead (4 hours at $5*/hour) 20
    Total overhead cost per unit $ 52
    *Based on a capacity of 100,000 direct labor hours per month.

    The following additional information is available for the month of November.
    22,000 pumps were produced although 25,000 had been scheduled for production.

    94,000 direct labor hours were worked at a total cost of $940,000.
    The standard direct labor rate is $9 per hour.
    The standard direct labor time per unit is four hours.
    Variable overhead costs were $740,000.
    Fixed overhead costs were $540,000
    .
    The variable overhead spending variance for November was:
    a.
    $24,000 favorable.
    b.
    $96,000 favorable.
    c.
    $12,000 favorable.
    d.
    $60,000 favorable.
    Explanation

    Budgeted variable overhead (


    >94,000 DL hrs. × $8/hr.) $ 752,000
    Actual variable overhead 740,000
    Favorable variance $ 12,000

     
    “ninja-cpa-review”/
     

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  • #750247
    Tartaglia2
    Member

    Hi, Also a NY Exam candidate here and I just took BEC. I think the difference has to do with the fact that the first question is asking for the FOH variance and the second is asking for the VOH. Look at the B2 lecture pages 55 and 56 for a better explanation.

    AUD - 95 - 2015 Q3
    BEC - 87 - 2015 Q4
    FAR - 89 - 2015 Q2
    REG - 90 - 2016 Q1

    #750248
    NYaccountingstudent
    Participant

    thanks! i will check that now

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