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Sebastian Company, which manufactures electrical switches, uses a standard cost system and carries all inventories at standard. The standard manufacturing overhead costs per switch are based on direct labor hours and are shown below:
(5 hours @ \$12 per direct manufacturing labor hour) \$ 60
(5 hours @ \$15* per direct manufacturing labor hour) 75
* Based on capacity of 200,000 direct manufacturing labor hours per month.
The following information is available for the month of December:
â?¢46,000 switches were produced although 40,000 switches were
scheduled to be produced.
â?¢225,000 direct manufacturing labor hours were worked at a total cost of
\$5,625,000.
â?¢Variable manufacturing overhead costs were \$2,750,000

a. Under the 2-variance method, the flexible budget variance for December was ?
b. The total variable manufacturing overhead variance was?

#### Solution Summary

Your response includes a chart in excel useful for future problems in analyzing all the variable overhead variances, including those requested. Click on cells to see formula.

\$2.19
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Capital investment decisions typically involve several kinds of cash flows. Which kind best describes an asset's residual value?
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Choosing the proper method of allocating costs to products and services can have a major impact on what?
the selling price of the product or service if selling price is based on competition
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In large firms where different divisions compete for limited investment capital, managers are tempted to make liberal cash flow assumptions that show positive Net Present Values (NPV) to obtain approval for their projects. What can senior management do to offset this tendency?
senior management should stipulate a discount rate much higher than the company's cost of capital to reduce the present value of projects
senior management should stipulate a discount rate slightly higher than the company's cost of capital to reduce the present value of projects
senior management should stipulate a discount rate much lower than the company's cost of capital to reduce the present value of projects
senior management should stipulate a discount rate slightly lower than the company's cost of capital to reduce the present value of projects

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how products should be distributed
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A collection of related operating budgets is known as a
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Hamilton has budgeted total manufacturing overhead costs for the year as \$125,000 based on 20,000 direct labor hours. The ratio of variable manufacturing overhead costs to fixed manufacturing overhead costs is 2:1. In a given month 2,000 direct labor hours are budgeted for production. How much overhead is budgeted?
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Research has shown that managers perform best when
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