Loose Leaf For Fundamental Accounting Principles Format: Loose-leaf
Loose Leaf For Fundamental Accounting Principles Format: Loose-leaf
24th Edition
ISBN: 9781260158557
Author: Wild
Publisher: Mcgraw Hill Publishers
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Chapter 23, Problem 20E
To determine

Controllable Variance:


The overall variance which comprises of variable overhead spending and efficiency variance and the fixed overhead spending and volume variance is called the controllable variance. It is basically the combination of variable and fixed overhead which the management of a company can influence.

Volume Variance:

The variance which arises due to difference in the budgeted level of activity and the actual level is called volume variance. The sole reason for this kind of variance is the variation in the level of activity.

Computation of Variances and classification of favorable or unfavorable

1. Overhead volume variance

2. Overhead controllable variance

Expert Solution & Answer
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Answer to Problem 20E

Solution:

1. Overhead Volume Variance is $6,250 and it is unfavorable.

2. Overhead Controllable Variance is $20,000 and it is favorable.

Explanation of Solution

1. Overhead Volume Variance

  Overhead Volume Variance =Budgeted FixedOverhead CostApplied Fixed Overhead Cost                                               = (PFOR X Standard Hours)  (PFOR X Standard Hours Applied)                                               = ($2.00 X 25,000 hours)  ($2.00 X 21,875 hours)                                               =$50,000 $43,750                                               = $6,250  Unfavorable

2. Overhead Controllable Variance

  Controllable Variance = Actual Overhead Cost  Budgeted Overhead Cost                                    = $305,000  ($50,000 + $275,000)                                    = $20,000   Favorable

Conclusion

World Company had unfavorable variance of $6,250 in volume variance and favorable variance of $20,000 in the controllable variance.

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Chapter 23 Solutions

Loose Leaf For Fundamental Accounting Principles Format: Loose-leaf

Ch. 23 - Prob. 11DQCh. 23 - Prob. 12DQCh. 23 - Prob. 13DQCh. 23 - How can the manager of advertising sales at Google...Ch. 23 - Prob. 15DQCh. 23 - Prob. 16DQCh. 23 - Is it possible to evaluate a cost center’s...Ch. 23 - Prob. 18DQCh. 23 - Prob. 1QSCh. 23 - Prob. 2QSCh. 23 - Prob. 3QSCh. 23 - Prob. 4QSCh. 23 - Prob. 5QSCh. 23 - Prob. 6QSCh. 23 - Prob. 7QSCh. 23 - Prob. 8QSCh. 23 - Prob. 9QSCh. 23 - Prob. 10QSCh. 23 - Prob. 11QSCh. 23 - Prob. 12QSCh. 23 - Prob. 13QSCh. 23 - Prob. 14QSCh. 23 - Volume variance P3 Refer to information in QS...Ch. 23 - Prob. 16QSCh. 23 - Prob. 17QSCh. 23 - Prob. 18QSCh. 23 - Prob. 19QSCh. 23 - Prob. 20QSCh. 23 - Prob. 21QSCh. 23 - Prob. 22QSCh. 23 - Prob. 23QSCh. 23 - Prob. 24QSCh. 23 - Exercise 23-1 Management by exception C1 Resset...Ch. 23 - Prob. 2ECh. 23 - Exercise 23-2 Preparing flexible budgets P1 Tempo...Ch. 23 - Prob. 4ECh. 23 - Prob. 5ECh. 23 - Prob. 6ECh. 23 - Prob. 7ECh. 23 - Prob. 8ECh. 23 - Prob. 9ECh. 23 - Prob. 10ECh. 23 - Prob. 11ECh. 23 - Prob. 12ECh. 23 - Exercise 23-13 Computing and interpreting...Ch. 23 - Prob. 14ECh. 23 - Exercise 23-15 Direct materials and direct labor...Ch. 23 - Prob. 16ECh. 23 - Prob. 17ECh. 23 - Exercise 23-18A Detailed overhead variances P5...Ch. 23 - Prob. 19ECh. 23 - Prob. 20ECh. 23 - Prob. 21ECh. 23 - Prob. 22ECh. 23 - Prob. 23ECh. 23 - Prob. 1APSACh. 23 - Prob. 2APSACh. 23 - Prob. 3APSACh. 23 - Prob. 4APSACh. 23 - Prob. 5APSACh. 23 - Prob. 6APSACh. 23 - Prob. 2BPSBCh. 23 - Prob. 3BPSBCh. 23 - Prob. 4BPSBCh. 23 - Prob. 5BPSBCh. 23 - Prob. 6BPSBCh. 23 - Prob. 23SPCh. 23 - Flexible budgets and standard costs emphasize the...Ch. 23 - Prob. 2AACh. 23 - Prob. 3AACh. 23 - Prob. 1BTNCh. 23 - Prob. 2BTNCh. 23 - Prob. 3BTNCh. 23 - Prob. 4BTNCh. 23 - Prob. 5BTNCh. 23 - Training employees to use standard amounts of...
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What is variance analysis?; Author: Corporate finance institute;https://www.youtube.com/watch?v=SMTa1lZu7Qw;License: Standard YouTube License, CC-BY