Overhead Variances, Two- And Three-Variance AnalysesOerstman, Inc., uses a standard costing system and develops its overhead rates from the current annual budget. Thebudget is based on an expected annual output of 121,500 units requiring 486,000 direct labor hours. (Practical capacity is506,000 hours.) Annual budgeted overhead costs total $748,440, of which $544,320 is fixed overhead. A total of 119,200units using 484,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were$240,100, and actual fixed overhead costs were $555,300.Required:1. Compute overhead variances using a two-variance analysis.Budget Variance$UnfavorableVolume Variance$Unfavorable2. Compute overhead variances using a three-variance analysis.Spending Variance$UnfavorableEfficiency Variance$UnfavorableVolume Variance$Unfavorable

The objective of the question is to compute the overhead variances using both two-variance and…

Answered: Overhead Variances, Two- And…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Overhead Variances, Four-Variance Analysis Oerstman, Inc., uses a standard costing system and develops its overhead rates from the current annual budget. The budget is based on an expected annual output of 126,000 units requiring 504,000 direct labor hours. (Practical capacity is 524,000 hours.) Annual budgeted overhead costs total $846,720, of which $599,760 is fixed overhead. A total of 119,400 units using 502,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were $260,500, and actual fixed overhead costs were $556,050. Required: 1. Compute the fixed overhead spending and volume variances. Fixed Overhead Spending Variance Fixed Overhead Volume Variance. 2. Compute the variable overhead spending and efficiency variances. Do not round intermediate calculations Variable Overhead Spending Variance. Variable Overhead Efficiency Variance
Siemens AG invests €80,000,000 to build a manufacturing plant to build wind turbines. The company predicts net cash flows of €16,000,000 per year for the next 8 years. Assume the company requires an 8% rate of return from its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your present value factor to 4 decimals.) (1) What is the payback period of this investment? (2) What is the net present value of this investment? Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the net present value of this investment? (Any losses or outflows should be entered with a minus sign.) Chart Values are Based on: Cash Flow Annual cash flow Select Chart Drenant value of noch inflown Present Value of 1 Future Value of 1 n= i = 91,945,600 91,945,600 80,000,000 11,945,600
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During the period, Shalom Company produced 8,000 units and applied overhead based on the direct labor hours. The standard cost card showed the following information: Standard Direct labor hours per unit Actual Direct labor hours 3 25,000 P1.90 P2.20 P48,000 P51,000 P55,000 Actual Fixed overhead cost P57,500 Determine the variances based on the information above. Indicate as favorable or unfavorable. Format should be: 8,000 F or 8,000 UF No need to indicate if the amount is positive or negative. Standard Fixed overhead per DLH Standard Variable overhead per DLH Budgeted variable overhead Actual Variable overhead cost Budgeted fixed overhead Amounts must be in whole numbers. Example: 88,000 or (88,000) Unit costs be in whole numbers. Example: 88 Format of percentages: 88% Words must be in capital letters. What is the fixed overhead volume variance?
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Yourtube Company uses a standard cost system and prepared the following budget at normal capacity for the month of January. Direct labor hours Variable factory overhead Fixed factory overhead Total factory overhead per DLH 24,000 $48,000 $108,000 $6.50 Actual data for January were as follows: 22,000 Total factory overhead $147,000 Direct labor hours worked Standard DLH allowed for the capacity attained 21,000 Using the two-way analysis of overhead variances, what is the budget (controllable) variance for January? A. $3,000. B. $13,500 unfavorable. C. $9,000 favorable. D. $10,500 unfavorable.
Overhead costs are applied using direct labour hours. The following were budgeted for the year: Planned production (units) 50,000 Direct labour hours 200,000 Variable overhead 1,000,000 Fixed overhead 600,000 The following were the actual results: Actual production (units) 48,000 Direct labour hours 195,000 Variable overhead 950,000 Fixed overhead 610,000 Calculate the variable overhead efficiency variance. Select one: a. $15,000 U b. $25,000 U c. $25,000 F d. $15,000 F
Robinwood Fixtures manufactures two products, K4 and X7. The company prepares its master budget on the basis of standard costs. The following data are for September: Standards Direct materials Direct labor, Variable overhead (per direct labor-hour) Fixed overhead (per month) Expected activity (direct labor-hours) Actual results Direct material (purchased and used) Direct labor Variable overhead Fixed overhead Units produced (actual) Direct materials Direct labor Variable overhead Fixed overhead Price Variance F F KA -0.75 pounds at $8.00 per pound 1.25 hours at $26.00 per hour $ 21.20 K4 $ 416,400 17,350 Required: a. Prepare a variance analysis for each variable cost for each product. b. Prepare a fixed overhead variance analysis for each product. Note: For all requirements, Do not round intermediate calculations. 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. 10,300 pounds at $7.40 per…
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Overhead Variances, Two- And Three-Variance Analyses Oerstman, Inc., uses a standard costing system and develops its overhead rates from the current annual budget. The budget is based on an expected annual output of 122,000 units requiring 488,000 direct labor hours. (Practical capacity is 508,000 hours.) Annual budgeted overhead costs total $741,760, of which $541,680 is fixed overhead. A total of 119,100 units using 486,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were $241,700, and actual fixed overhead costs were $556,050. Required: 1. Compute overhead variances using a two-variance analysis. Budget Variance Volume Variance 2. Compute overhead variances using a three-variance analysis. Spending Variance Efficiency Variance Volume Variance 00 00
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