Concept explainers
For each of the following independent Cases A and B, fill in the missing information. The company budgets and applies production
Calculate the missing amount for each of the given independent case A and B.
Explanation of Solution
Flexible Budget: A flexible budget is a budget that is prepared for different levels of the output. In other words, it is a budget that adjusts according to the changes in the volume of the activity. The main purpose of preparing flexible budget is to determine the differences among standard and actual result.
Calculate the missing amount for each of the given independent case A and B as follows:
Particulars | Case A | Case B |
1. Standard variable overhead rate | $2.50 per hour |
$4.00 per hour (13) |
2. Standard fixed overhead rate |
$7.00 per hour (2) |
$9.00 per hour (14) |
3. Total standard overhead rate |
$9.50 per hour (3) | $13.00 per hour |
4. Flexible budget for variable overhead | $ 90,000 |
$ 6,400 (15) |
5. Flexible budget for fixed overhead | $ 210,000 |
$ 18,000 (16) |
6. Actual variable overhead |
$ 98,050 (4) |
$ 8,000 (17) |
7. Actual fixed overhead | $ 207,000 |
$ 19,080 (18) |
8. Variable overhead spending variance | $5,550 U | $2,000 U |
9. Variable overhead efficiency variance |
$2,500 U (5) | $400 F |
10. Fixed overhead budget variance |
$3,000 F (6) | $1,080 U |
11. Fixed overhead volume variance |
-$42,000 (7) | $3,600 U |
12. Under (over) applied variable overhead | $8,050 Under applied (8) | $1,600 Under applied (19) |
13. Under (over) applied fixed overhead | $45,000 over applied (9) | $4,680 under applied (21) |
14. Budgeted production (in units) | 5,000 units | 1,000 units (22) |
15. Standard direct labor hours per unit | 6 hours per unit | 2 hours per unit |
16. Actual production (in units) | 6,000 units (10) | 800 units (23) |
17. Standard direct labor hours allowed for actual production | 36,000 hours | 1,600 hours |
18. Actual direct labor hours | 37,000 hours | 1,500 hours |
19. Applied variable overhead | $ 90,000 (11) | $ 6,400 (24) |
20. Applied fixed overhead | $ 252,000 (12) | $ 14,400 (25) |
Table (1)
Working note (1):
Calculate the budgeted direct labor hours for Case A.
Working note (2):
Calculate the standard fixed overhead rate for Case A.
Working note (3):
Calculate the total standard overhead rate for Case A.
Working note (4):
Calculate the actual variable overhead for Case A.
Working note (5):
Calculate the variable overhead efficiency variance for Case A.
Working note (6):
Calculate the fixed overhead budget variance for Case A.
Working note (7):
Calculate the fixed overhead volume variance for Case A.
Working note (8):
Calculate the under applied variable overhead for Case A.
Working note (9):
Calculate the over applied fixed overhead for Case A.
Working note (10):
Calculate the actual production for Case A.
Working note (11):
Calculate the applied variable overhead for Case A.
Working note (12):
Calculate the applied fixed overhead for Case A.
Working note (13):
Calculate the variable overhead efficiency variance for Case B.
Working note (14):
Calculate the standard fixed overhead rate for Case B.
Working note (15):
Calculate the flexible budget for variable overhead for Case B.
Working note (16):
Calculate the flexible budget for fixed overhead for Case B.
Working note (17):
Calculate the actual variable overhead for Case B.
Working note (18):
Calculate the actual fixed overhead for Case B.
Working note (19):
Calculate the under applied variable overhead for Case B.
Working note (20):
Calculate the under applied fixed overhead for Case B.
Working note (21):
Calculate the budgeted direct labor hours for Case B:
Working note (22):
Calculate the budgeted production for Case B:
Working note (23):
Calculate the actual production for Case B:
Working note (24):
Calculate the applied variable overhead for Case B:
Working note (25):
Calculate the applied fixed overhead for Case B:
Want to see more full solutions like this?
Chapter 11 Solutions
Connect 1-Semester Access Card for Managerial Accounting: Creating Value in a Dynamic Business Environment (NEW!!)
- The variable overhead rate variance is caused by the sum between which of the following? A. actual and standard allocation base B. actual and standard overhead rates C. actual and budgeted units D. actual units and actual overhead ratesarrow_forwardKamen Manufacturing Co. estimates the following labor and overhead costs for the period: Required: Use the four-variance method for overhead analysis. Calculate the variances for direct labor and overhead. Prove that the overhead variances equal over- or underapplied factory overhead for the period.arrow_forwardThe fixed factory overhead variance is caused by the difference between which of the following? A. actual and standard allocation base B. actual and budgeted Units C. actual fixed overhead and applied fixed overhead D. actual and standard overhead ratesarrow_forward
- A. Describe the two variances between the actual costs and the standard costs for factory overhead. B. What is a factory overhead cost variance report?arrow_forwardAcme Inc. has the following information available: A. Compute the material price and quantity, and the labor rate and efficiency variances. B. Describe the possible causes for this combination of favorable and unfavorable variances.arrow_forwardA. What are the two variances between the actual cost and the standard cost for direct labor? B. Who generally has control over the direct labor cost variances?arrow_forward
- The variable overhead efficiency variance is caused by the difference between which of the following? A. actual and budgeted units B. actual and standard allocation base C. actual and standard overhead rates D. actual units and actual overhead ratesarrow_forwardIf a company uses predetermined rate for absorption of manufacturing overhead, the volume variance is a. The difference between budgeted cost and actual cost of fixed overhead items. b. The under- or over-applied variable cost element of overhead. c. The under- or over-applied fixed cost element of overhead. d. The difference between budgeted cost and actual cost of variable overhead items.arrow_forwarda. Analyze the factory overhead variance of Golden Manufacturers Inc., based on the given data.arrow_forward
- 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.arrow_forwardWhich of the following is a correct equation to calculate the fixed overhead production-volume variance? a. budgeted fixed overhead costs − fixed overhead costs allocated for actual output b. static budget amount − flexible budget amount c. actual costs incurred − fixed overhead costs allocated for actual output d. flexible budget amount − actual costs incurredarrow_forwardWhich of the following equations can be used to compute a labor rate variance (where AH = actual hours; SH = standard hours allowed; AR = actual rate; SR = standard rate)? Multiple Choice [SH x (AR – SR)] [AH - (AR – SR)] [AH x (AR – SR)] [SH - (AR – SR)]arrow_forward
- Principles of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage LearningPrinciples of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax CollegeManagerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
- Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,Financial & Managerial AccountingAccountingISBN:9781285866307Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningAccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,