Managerial Accounting: Creating Value in a Dynamic Business Environment
12th Edition
ISBN: 9781260417074
Author: HILTON, Ronald
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Textbook Question
Chapter 11, Problem 50P
Montreal Scholastic Supply Company uses a standard-costing system. The firm estimates that it will operate its manufacturing facilities at 800,000 machine hours for the year. The estimate for total budgeted
Required:
- 1. Compute the following variances. Indicate whether each is favorable or unfavorable, where appropriate.
- a. Variable-overhead spending variance.
- b. Variable-overhead efficiency variance.
- c. Fixed-overhead
budget variance . - d. Fixed-overhead volume variance.
- 2. Prepare
journal entries to- Record the incurrence of actual variable overhead and actual fixed overhead.
- Add variable and fixed overhead to Work-in-Process Inventory.
- Close underapplied or overapplied overhead into Cost of Goods Sold.
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Patton Corporation uses a standard cost system to account for the costs of its one product. Budgeted fixed overhead is $83,000, budgeted production is 2,420 per month, and practical capacity is 3,400 units. During November, Patton produced 2,200 units. Fixed overhead incurred totaled $70,710.
Now assume Patton calculates its fixed overhead rate based on practical capacity.
What is the fixed overhead capacity rate?
What is the expected (planned) capacity variance?
What is the unexpected (unplanned) capacity variance?
By how much was fixed overhead over- or underapplied?
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Exercise 16-36 (Algo) Variable Cost Variances (LO 16-5)
Paynesville Corporation manufactures and sells a preservative used in food and drug manufacturing. The company carries no
inventories. The master budget calls for the company to manufacture and sell 132,000 liters at a budgeted price of $315 per liter this
year. The standard direct cost sheet for one liter of the preservative follows.
(2 pounds @ $20)
(0.5 hours @ $56)
Direct materials
Direct labor
28
Variable overhead is applied based on direct labor hours. The variable overhead rate is $180 per direct-labor hour. The fixed overhead
rate (at the master budget level of activity) is $90 per unit. All non-manufacturing costs are fixed and are budgeted at $2.8 million for
the coming year.
At the end of the year, the costs analyst reported that the sales activity variance for the year was $942,000 unfavorable.
The following is the…
Thorne Company has the following information available for the past year. They use machine hours to allocate overhead.
NOTE: All dollar amounts are rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345). For the variance conditions, your answer is either "F” (for Favorable) or "U” (for Unfavorable) - capital letter and no quotes.
What is the variable overhead efficiency variance?
Is it favorable or unfavorable?
Chapter 11 Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
Ch. 11 - Distinguish between static and flexible budgets.Ch. 11 - Explain the advantage of using a flexible budget.Ch. 11 - Why are flexible overhead budgets based on...Ch. 11 - Distinguish between a columnar and a formula...Ch. 11 - Show, using T-accounts, how production overhead is...Ch. 11 - How have advances in manufacturing technology...Ch. 11 - What is the interpretation of the...Ch. 11 - Jeffries Companys only variable-overhead cost is...Ch. 11 - What is the interpretation of the...Ch. 11 - Distinguish between the interpretations of the...
Ch. 11 - What is the fixed-overhead budget variance?Ch. 11 - What is the correct interpretation of the...Ch. 11 - Describe a common but misleading interpretation of...Ch. 11 - Draw a graph showing budgeted and applied fixed...Ch. 11 - What types of organizations use flexible budgets?Ch. 11 - What is the conceptual problem of applying fixed...Ch. 11 - Distinguish between the control purpose and the...Ch. 11 - Why are fixed-overhead costs sometimes called...Ch. 11 - Draw a graph showing both budgeted and applied...Ch. 11 - Give one example of a plausible activity base to...Ch. 11 - Explain how an activity-based flexible budget...Ch. 11 - Crystal Glassware Company has the following...Ch. 11 - Refer to the data in the preceding exercise. Use...Ch. 11 - Crystal Glassware Company has the following...Ch. 11 - The following data are the actual results for...Ch. 11 - Evening Star, Inc. produces binoculars of two...Ch. 11 - The controller for Rainbow Childrens Hospital,...Ch. 11 - You recently received the following note from the...Ch. 11 - You brought your work home one evening, and your...Ch. 11 - Refer to DCdesserts.coms activity-based flexible...Ch. 11 - Montoursville Control Company, which manufactures...Ch. 11 - Prob. 33ECh. 11 - The following data pertain to Aurora Electronics...Ch. 11 - Calgary Paper Company produces paper for...Ch. 11 - Gibralter Insurance Company uses a flexible...Ch. 11 - Country time Studios is a recording studio in...Ch. 11 - Newark Plastics Corporation developed its overhead...Ch. 11 - Johnson Electrical produces industrial ventilation...Ch. 11 - Fall City Hospital has an outpatient clinic....Ch. 11 - Maxwell Company uses a standard cost accounting...Ch. 11 - Mark Fletcher, president of SoftGro, Inc., was...Ch. 11 - LawnMate Company manufactures power mowers that...Ch. 11 - For each of the following independent Cases A and...Ch. 11 - Prob. 45PCh. 11 - Prob. 46PCh. 11 - WoodCrafts, Inc. is a manufacturer of furniture...Ch. 11 - Rutherford Wheel and Axle, Inc. has an automated...Ch. 11 - Chillco Corporation produces containers of frozen...Ch. 11 - Montreal Scholastic Supply Company uses a...Ch. 11 - College Memories, Inc. publishes college...Ch. 11 - While Mountain Sled Company manufactures childrens...Ch. 11 - Cleveland Computer Accessory Company (CCAC)...Ch. 11 - Prob. 54CCh. 11 - Prob. 55C
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