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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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Anker Company had the data below for its most recent year, ended December 31:

Chapter 10, Problem 61E, Anker Company had the data below for its most recent year, ended December 31: Required: Prepare a

Required:

Prepare a performance report that shows the variances on an item-by-item basis.

To determine

Construct a performance report which shows the variances of each variable overhead item.

Explanation

Overhead Variance:

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

Performance report of the variances:

  Budget for actualBudget for standard
Overhead cost item

Actual cost

(A)

($)

Actual Hours

(B)

($)

Spending variance

(A-B)

Standard Hours

(C)

($)

Efficiency variance

(B-C)

Indirect labor36,00035,7601240 (U)36,0003240 (F)
Supplies3,8003,5762224 (U)3,600424(F)
Total39,80039,336464 (U)39,600264(F)

Table (1)

Working Note:

1. Calculation of actual hours of indirect labor:

Actual Hours=Actual Labor Hours Worked×Actual Rate=1,490 Hours×$24=$35,760

2

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