Fixed Overhead Spending/ Budget Variance : The Fixed Overhead budget variance is the difference between the actual fixed overhead cost and budgeted fixed overhead cost. The formula to calculate the Fixed Overhead budget Variance is as follows: F i x e d O v e r h e a d B u d g e t V a r i a n c e = A c t u a l F i x e d O v e r h e a d − B u d g e t e d F i x e d O v e r h e a d Fixed Overhead Volume variance: The Fixed Overhead Volume variance is the difference between the allocated fixed overhead cost and the budgeted fixed overhead cost. The formula to calculate the Fixed Overhead volume Variance is as follows: F i x e d O v e r h e a d V o l u m e V a r i a n c e = A l l o c a t e d F i x e d O v e r h e a d − B u d g e t e d F i x e d O v e r h e a d Note: The allocated fixed overhead is calculated with the help of following formula: A l l o c a t e d f i x e d O v e r h e a d c o s t = Standard h o u r s × P r e d e t e r m i n e d f i x e d O v e r h e a d a l l o c a t i o n r a t e To calculate: Fixed Overhead spending variance.

Question

Want to see the full answer?

Answer 1

Question

Definition Definition Measure used to estimate the difference between the budgeted and annual proportion for a specific accounting year. A favorable budget variance refers to positive variances or gains, while unfavorable or negative variances refer to a shortfall in the budget. A budget variance is indicative of the instances where the actual costs incurred are higher or lower than the estimated costs.

Chapter 9, Problem 2.1GBP

To determine

Concept introduction:

Fixed Overhead Spending/ Budget Variance:

The Fixed Overhead budget variance is the difference between the actual fixed overhead cost and budgeted fixed overhead cost. The formula to calculate the Fixed Overhead budget Variance is as follows:

Fixed Overhead Budget Variance = Actual Fixed Overhead − Budgeted Fixed Overhead

Fixed Overhead Volume variance:

The Fixed Overhead Volume variance is the difference between the allocated fixed overhead cost and the budgeted fixed overhead cost. The formula to calculate the Fixed Overhead volume Variance is as follows:

Fixed Overhead Volume Variance = Allocated Fixed Overhead − Budgeted Fixed Overhead

Note: The allocated fixed overhead is calculated with the help of following formula:

Allocated fixed Overhead cost = Standard hours ×Predetermined fixed Overhead allocation rate

To calculate:

Fixed Overhead spending variance.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

A. Show the solution for each. Compute in details the Variable Manufacturing Overhead Variances - Spending and Efficiency. B. Show the solution for each. Compute in details the Fixed Manufacturing Overhead Variances - Budget and Volume.

For fixed overhead costs, compute the spending and the production-volume variances.

Computing and journalizing standard cost variances McKnight manufactures coffee mugs that it sells to other companies for customizing with their own logos. McKnight prepares flexible budgets and uses a standard cost system to control manufacturing costs. The standard unit cost of a coffee mug is based on static budget volume of 59,800 coffee mugs per month: Direct Materials (0.2 lbs. @ $0.25 per Ib.) $ 0.05 Direct Labor (3 minutes @ $0.11 per minute) 0.33 Manufacturing Overhead: Variable (3 minutes @ $0.06 per minute) $ 0.18 Fixed (3 minutes @ $0.15 per minute) 0.45 0.63 Total Cost Per Coffee Mug $ 1.01 Actual cost and production information for July 2020 follow: а. Actual production and sales were 62,500 coffee mugs. b. Actual direct materials usage was 10,000 Ibs. at an actual cost of $0.17 per Ib. Actual direct labor usage of 198,000 minutes at a cost of $25,740. d. Actual overhead cost was $8,500 variable and $32,100 fixed. e. Selling and administrative costs were $110,000. C.

Answer 2

Question

Definition Definition Measure used to estimate the difference between the budgeted and annual proportion for a specific accounting year. A favorable budget variance refers to positive variances or gains, while unfavorable or negative variances refer to a shortfall in the budget. A budget variance is indicative of the instances where the actual costs incurred are higher or lower than the estimated costs.

Chapter 9, Problem 2.1GBP

To determine

Concept introduction:

Fixed Overhead Spending/ Budget Variance:

The Fixed Overhead budget variance is the difference between the actual fixed overhead cost and budgeted fixed overhead cost. The formula to calculate the Fixed Overhead budget Variance is as follows:

Fixed Overhead Budget Variance = Actual Fixed Overhead − Budgeted Fixed Overhead

Fixed Overhead Volume variance:

The Fixed Overhead Volume variance is the difference between the allocated fixed overhead cost and the budgeted fixed overhead cost. The formula to calculate the Fixed Overhead volume Variance is as follows:

Fixed Overhead Volume Variance = Allocated Fixed Overhead − Budgeted Fixed Overhead

Note: The allocated fixed overhead is calculated with the help of following formula:

Allocated fixed Overhead cost = Standard hours ×Predetermined fixed Overhead allocation rate

To calculate:

Fixed Overhead spending variance.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Definition Definition Measure used to estimate the difference between the budgeted and annual proportion for a specific accounting year. A favorable budget variance refers to positive variances or gains, while unfavorable or negative variances refer to a shortfall in the budget. A budget variance is indicative of the instances where the actual costs incurred are higher or lower than the estimated costs.

Chapter 9, Problem 2.1GBP

To determine

Concept introduction:

Fixed Overhead Spending/ Budget Variance:

The Fixed Overhead budget variance is the difference between the actual fixed overhead cost and budgeted fixed overhead cost. The formula to calculate the Fixed Overhead budget Variance is as follows:

Fixed Overhead Budget Variance = Actual Fixed Overhead − Budgeted Fixed Overhead

Fixed Overhead Volume variance:

The Fixed Overhead Volume variance is the difference between the allocated fixed overhead cost and the budgeted fixed overhead cost. The formula to calculate the Fixed Overhead volume Variance is as follows:

Fixed Overhead Volume Variance = Allocated Fixed Overhead − Budgeted Fixed Overhead

Note: The allocated fixed overhead is calculated with the help of following formula:

Allocated fixed Overhead cost = Standard hours ×Predetermined fixed Overhead allocation rate

To calculate:

Fixed Overhead spending variance.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Definition Definition Measure used to estimate the difference between the budgeted and annual proportion for a specific accounting year. A favorable budget variance refers to positive variances or gains, while unfavorable or negative variances refer to a shortfall in the budget. A budget variance is indicative of the instances where the actual costs incurred are higher or lower than the estimated costs.

Chapter 9, Problem 2.1GBP

To determine