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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Use the following information for Exercises 10-56 and 10-57:

Rostand Inc. operates a delivery service for over 70 restaurants. The corporation has a fleet of vehicles and has invested in a sophisticated, computerized communications system to coordinate its deliveries. Rostand has gathered the following actual data on last year’s delivery operations:

Chapter 10, Problem 56E, Use the following information for Exercises 10-56 and 10-57: Rostand Inc. operates a delivery

Rostand employs a standard costing system. During the year, a variable overhead rate of $5.10 per hour was used. The labor standard requires 0.80 hour per delivery.

Exercise 10-56 Variable Overhead Variances, Service Company

Refer to the information for Rostand Inc. above.

Required:

  1. 1. Compute the standard hours allowed for actual deliveries made last year.
  2. 2. Compute the variable overhead spending and efficiency variances.

1.

To determine

Calculate the value of standard hours.

Explanation

Variance:

The amount obtained when actual cost is deducted from budgeted cost is known as variance. Variance is calculated to find whether the cost is over applied or under applied.

Use the following formula to calculate the value of standard hours:

Standard Hours=Actual Delivery×Standard Direct Labor Hours

Substitute 38,600 for actual delivery and 0

2.

To determine

Calculate the value of variable overhead spending and volume variances.

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