A company that wants to report both spending and efficiency variances for 1 point overhead must compute budget allowances for both the actual amount of activity that occurred and the standard level of activity allowed for the level of output achieved. True O False

A company that wants to report both spending and efficiency variances for 1 point overhead must compute budget allowances for both the actual amount of activity that occurred and the standard level of activity allowed for the level of output achieved. True O False

Name: A company that wants to report both spending and efficiency variances
Uploaded: 2024-03-20T06:33:06.000Z
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Description: A company that wants to report both spending and efficiency variances for 1 point overhead must compute budget allowances for both the actual amount of activity that occurred and the standard level of activity allowed for the level of output achieved

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Information on Grixdale Partner's fixed overhead costs follows: Overhead applied Actual overhead Budgeted overhead $ 1,228,400 1,154,100 1,208,500 Required: What are the fixed overhead price and production volume variances? Note: Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. Fixed overhead price variance Fixed overhead production volume variance
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1. Compute for Spending Variance 2. Compute for Variable Overhead Efficiency Variance 3. Compute for Controllable Variance
Variance Industries, Ltd. creates problems for accounting students. At the end of the first quarter of 2021, you have been asked to prepare a variance analysis of the company's operations for the quarter recently ended. You have gathered the data below from the company's accounts and the static budget prepared in December 2020. Variable and fixed manufacturing overhead are allocated based on direct- labour dollars. Units manufactured and sold Sales revenue Variable costs Direct materials Direct labour Variable manufacturing overhead Total variable costs Contribution margin Fixed manufacturing overhead Operating income (loss) Actual results Static budget 10,000 12,000 $320,000 $50,000 125,000 29,000 204,000 116,000 73,000 43,000 $360,000 $60,000 120,000 24,000 204,000 156,000 72,000 84,000
Walton Publications established the following standard price and costs for a hardcover picture book that the company produces. Standard price and variable costs Sales price Materials cost Labor cost $ 36.50 8.30 4.30 Overhead cost Selling, general, and administrative costs Planned fixed costs 5.50 7.00 Manufacturing overhead Selling, general, and administrative $129,000 51,000 Walton planned to make and sell 38,000 copies of the book. Required: a. - d. Prepare the pro forma income statement that would appear in the master budget and also flexible budget income statements, assuming production volumes of 37,000 and 39,000 units. Determine the sales and variable cost volume variances, assuming volume is actually 39,000 units. Indicate whether the variances are favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).)
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If a company uses predetermined rate for absorption of manufacturing overhead, the volume variance is O The under- or over-applied fixed cost element of overhead. O The difference between budgeted cost and actual cost of variable overhead items. O The difference between budgeted cost and actual cost of fixed overhead items. O The under- or over-applied variable cost element of overhead.
State the difference between Standard costing & Budgetary control. Give your analysis with 5 points differences?