Cost Accounting (15th Edition)
Cost Accounting (15th Edition)
15th Edition
ISBN: 9780133428704
Author: Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
Question
Book Icon
Chapter 8, Problem 8.18E

1.

To determine

Variable Cost:

The cost which fluctuates on the basis of the output level produced. The variable cost and output shares a direct relationship.

Denominator-Level:

Denominator-level is a term used to depict the capacity level that is considered for evaluation of business operations or production process. It uses theoretical capacity and practical capacity to analyze the production and normal capacity utilization and master budget capacity utilization to analyze customer demand.

. The denominator level used for allocation of variable overhead.

2.

To determine

Spending Variance:

It indicates the amount of actual cost incurred for actual production over the estimated or expected cost for the same level of production.

Efficiency Variance:

It indicates the quantity of actual input over the budgeted input quantity at the budgeted rate.

Flexible-Budget Variance:

It reports the actual results over the results of flexible budgets and flexible budgets are those budgets which indicate the budgeted values for actual output.

To prepare: The variance analysis of variable overhead.

3.

To determine

To explain: The overview of results calculated in ‘part 2’.

Blurred answer
Knowledge Booster
Background pattern image
Recommended textbooks for you
Text book image
FINANCIAL ACCOUNTING
Accounting
ISBN:9781259964947
Author:Libby
Publisher:MCG
Text book image
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Text book image
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Text book image
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Text book image
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Text book image
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education