Mini-Exercise 15-6 (Algo) Fixed overhead variances LO 15-4, 15-5, 15-6 Acme Company's production budget for August is 18,600 units and includes the following component unit costs: direct materials, $8.0; direct labor, $11.5; variable overhead, $5.00. Budgeted fixed overhead is $43,000. Actual production in August was 19,998 units. Actual unit component costs incurred during August include direct materials, $10.00; direct labor, $10.50; variable overhead, $6.00. Actual fixed overhead was $45,600. The standard fixed overhead application rate per unit consists of $2.5 per machine hour and each unit is allowed a standard of 1 hour of machine time. Required: Calculate the fixed overhead budget variance and the fixed overhead volume variance. Note: Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Fixed overhead budget variance Fixed overhead volume variance
Mini-Exercise 15-6 (Algo) Fixed overhead variances LO 15-4, 15-5, 15-6 Acme Company's production budget for August is 18,600 units and includes the following component unit costs: direct materials, $8.0; direct labor, $11.5; variable overhead, $5.00. Budgeted fixed overhead is $43,000. Actual production in August was 19,998 units. Actual unit component costs incurred during August include direct materials, $10.00; direct labor, $10.50; variable overhead, $6.00. Actual fixed overhead was $45,600. The standard fixed overhead application rate per unit consists of $2.5 per machine hour and each unit is allowed a standard of 1 hour of machine time. Required: Calculate the fixed overhead budget variance and the fixed overhead volume variance. Note: Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Fixed overhead budget variance Fixed overhead volume variance
Chapter8: Standard Costs And Variances
Section: Chapter Questions
Problem 8EB: Case made 24,500 units during June, using 32,000 direct labor hours. They expected to use 31,450...
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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