Concept explainers
(a)
Concept introduction:
Fixed
It is calculated by dividing fixed
To compute:
The fixed overhead rate based on budgeted production.
(b)
Concept introduction:
Fixed overhead spending variances:
It is the difference between budgeted fixed overhead and actual fixed overhead.
To compute:
The fixed overhead spending variances of SC company.
(c)
Concept introduction:
Fixed overhead volume variance:
It is the difference betweenthe fixed overhead incurred actually to manfacture goods as per the volume which is calculated by multiplying fixed overhead rate with actual volume and the fixed overhead that ought to be incurred i.e. budgted to manfacture goods as per the volume which is calculated by multiplyingfixed overhead rate with budgeted volume.
To compute:
Thefixed overhead volume variance.
(d)
Concept introduction:
Total of fixed overhead spending variance and fixed overhead volume variance is used to calculate over or under applied fixed manufacturing overhead.
To compute:
The over and under applied fixed manufacturing overhead.
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Managerial Accounting
- Fixed Overhead Spending and Volume Variances, Columnar and Formula Approaches Corey Company provided the following information: Required: 1. Using the columnar approach, calculate the fixed overhead spending and volume variances. 2. Using the formula approach, calculate the fixed overhead spending variance. 3. Using the formula approach, calculate the fixed overhead volume variance. 4. Calculate the total fixed overhead variance.arrow_forwardPerformance Report for Variable Variances Humo Company provided the following information: Required: Prepare a performance report that shows the variances for each variable overhead item (inspection and power).arrow_forwardPerformance Report for Variable Variances Potter Company provided the following information: Required: Prepare a performance report that shows the variances for each variable overhead item (inspection and power).arrow_forward
- Kamen 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_forwardMulliner Company showed the following information for the year: Required: 1. Calculate the standard direct labor hours for actual production. 2. Calculate the applied variable overhead. 3. Calculate the total variable overhead variance.arrow_forwardRecompute the variances from the second Acme Inc. exercise using $0.0725 as the standard cost of the material and $14 as the standard labor cost per hour. How has your explanation of the variances changed?arrow_forward
- At the end of the period, the factory overhead account has a credit balance of 10,000. (a) Is the total factory cost variance favorable or unfavorable? (b) Are the controllable and volume variances favorable or unfavorable?arrow_forward(Appendix) Calculating factory overhead: three variances Using the data given in E8-17, calculate the following overhead variances: a. Spending variance. b. Production-volume variance. c. Efficiency variance. d. Was the factory overhead under- or overapplied? By what amount? In all problems involving variances, use F and U to indicate favorable and unfavorable variances, respectively.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_forward
- If variances are recorded in the accounts at the time the manufacturing costs are incurred, what does a debit balance in Direct Materials Price Variance represent?arrow_forwardReddy Corporation has collected the following data for the month or June: What is the variable overhead efficiency variance?arrow_forwardVariable Overhead Spending and Efficiency Variances, Columnar and Formula Approaches Rath Company provided the following information: Required: 1. Using the columnar approach, calculate the variable overhead spending and efficiency variances. 2. Using the formula approach, calculate the variable overhead spending variance. 3. Using the formula approach, calculate the variable overhead efficiency variance. 4. Calculate the total variable overhead variance.arrow_forward
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