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 Journal Entry : In journal entry company records all the business transactions which are in monetary form. Company records the transaction on debit and credit in journal entry which are always equal. To indicate: The Journal entry for Fixed Overhead Cost and related variances.

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 4GAP

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

Journal Entry: In journal entry company records all the business transactions which are in monetary form. Company records the transaction on debit and credit in journal entry which are always equal.

To indicate:

The Journal entry for Fixed Overhead Cost and related variances.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Question 3 A shoe company had the following journal entries recorded for the end of June. Materials Control 300,000 Direct Materials Price Variance 10,000 Accounts Payable Control 290,000 Work-in-Process Control 120,000 8,000 Direct Materials Efficiency Variance Materials Control 128,000 Standard cost for direct labor per pair of shoes: 1 hour at a standard price of $100 each. The company produced 8,500 shoes in June with 8,470 hours and incurred total direct labor costs of $832,000.

3. Provide the appropriate journal entry to record the fixed overhead spending variance and the appropriate journal entry to record the production volume variance for March. Assume that the company uses a single account, Factory Overhead, to record overhead costs.

Required:1. Compute the plantwide predetermined overhead rate and calculate the overhead assigned toeach product.2. Calculate the predetermined departmental overhead rates and calculate the overheadassigned to each product.3. Using departmental rates, compute the applied overhead for the year. What is the under- oroverapplied overhead for the firm?4. Prepare the journal entry that disposes of the overhead variance calculated in Requirement3, assuming it is not material in amount. What additional information would you need ifthe variance is material to make the appropriate journal entry?

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 4GAP

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

Journal Entry: In journal entry company records all the business transactions which are in monetary form. Company records the transaction on debit and credit in journal entry which are always equal.

To indicate:

The Journal entry for Fixed Overhead Cost and related variances.

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 4GAP

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

Journal Entry: In journal entry company records all the business transactions which are in monetary form. Company records the transaction on debit and credit in journal entry which are always equal.

To indicate:

The Journal entry for Fixed Overhead Cost and related variances.

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 4GAP

To determine