BuyFindarrow_forward

Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883

Solutions

Chapter
Section
BuyFindarrow_forward

Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883
Textbook Problem

Variance interpretation
Harmony Industries Inc. is a small manufacturer of electronic musical instruments. The plant manager received the following variable factory overhead report for the period:

The plant manager is not pleased with the $29,800 unfavorable variable factory overhead controllable variance and has come to discuss the matter with the controller. The following discussion occurred:

Plant Malinger: I just received this factory report for the latest month of operation. I'm not pleased with these figures. Before these numbers go to headquarters, you and 1 will need to reach an understanding.
Controller: Go ahead, what's the problem?
Plant Manager: What's the problem? Well, everything, took at the variance. It's too large. If I understand the accounting approach being used here, you are assuming that my costs are variable to the units produced. Thus, as the production volume declines, so should these costs. Well. I don't bdleve that these costs are variable at all. I think they are fixed costs. As a result, when we operate below capacity, the costs really don'l go down at all. I'm being penalized for costs I have no control over at all. I need this report to be redone to reflect this fact. If anything, the difference between actual and budget is essentially a volume variance. Listen. I know that you're a learn player. You really need to reconsider your assumptions on this one.
If you were in the controller's position, how would you respond to the plant manager?

To determine

Concept Introduction:

The variable factory overhead controlled variance is difference between the budgeted and actual variable factory overhead.

The fixed factory overhead volume variance is the difference between the standard fixed factory overhead at actual production and at 100% of normal capacity.

The variable and fixed factory overhead controlled variance is that variance which does not change with change in volume.

The response to the problem faced by the plant manager in regard to the unfavorable controllable variance.

Explanation

The company is working at 75% capacity and producing 15,000 units which means company can produce up to 20,000 units if worked at full capacity. Now, if the expenditure is analyzed it has been observed that the actual expenditure is more than the budgeted expenditure and gives an unfavorable controllable variance of

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Chapter 13 Solutions

Show all chapter solutions add
Ch-13 P-6CDQCh-13 P-7CDQCh-13 P-8CDQCh-13 P-9CDQCh-13 P-10CDQCh-13 P-11CDQCh-13 P-12CDQCh-13 P-13CDQCh-13 P-14CDQCh-13 P-15CDQCh-13 P-16CDQCh-13 P-17CDQCh-13 P-18CDQCh-13 P-19CDQCh-13 P-20CDQCh-13 P-21CDQCh-13 P-22CDQCh-13 P-23CDQCh-13 P-24CDQCh-13 P-25CDQCh-13 P-26CDQCh-13 P-13.1ECh-13 P-13.2ECh-13 P-13.3ECh-13 P-13.4ECh-13 P-13.5ECh-13 P-13.6ECh-13 P-13.7ECh-13 P-13.8ECh-13 P-13.9ECh-13 P-13.10ECh-13 P-13.11ECh-13 P-13.12ECh-13 P-13.13ECh-13 P-13.14ECh-13 P-13.15ECh-13 P-13.16ECh-13 P-13.17ECh-13 P-13.18ECh-13 P-13.19ECh-13 P-13.20ECh-13 P-13.21ECh-13 P-13.22ECh-13 P-13.23ECh-13 P-13.24ECh-13 P-13.25ECh-13 P-13.26ECh-13 P-13.27ECh-13 P-13.28ECh-13 P-13.29ECh-13 P-13.30ECh-13 P-13.1.1PCh-13 P-13.1.2PCh-13 P-13.1.3PCh-13 P-13.1.4PCh-13 P-13.2.1PCh-13 P-13.2.2PCh-13 P-13.2.3PCh-13 P-13.2.4PCh-13 P-13.2.5PCh-13 P-13.2.6PCh-13 P-13.2.7PCh-13 P-13.2.8PCh-13 P-13.3.1PCh-13 P-13.3.2PCh-13 P-13.4PCh-13 P-13.5PCh-13 P-13.6.1PCh-13 P-13.6.2PCh-13 P-13.6.3PCh-13 P-13.6.4PCh-13 P-13.6.5PCh-13 P-13.6.6PCh-13 P-13.7PCh-13 P-13.1.1MBACh-13 P-13.1.2MBACh-13 P-13.1.3MBACh-13 P-13.1.4MBACh-13 P-13.1.5MBACh-13 P-13.1.6MBACh-13 P-13.2.1MBACh-13 P-13.2.2MBACh-13 P-13.2.3MBACh-13 P-13.2.4MBACh-13 P-13.2.5MBACh-13 P-13.3.1MBACh-13 P-13.3.2MBACh-13 P-13.3.3MBACh-13 P-13.3.4MBACh-13 P-13.4.1MBACh-13 P-13.4.2MBACh-13 P-13.4.3MBACh-13 P-13.4.4MBACh-13 P-13.5.1MBACh-13 P-13.5.2MBACh-13 P-13.5.3MBACh-13 P-13.5.4MBACh-13 P-13.6.1MBACh-13 P-13.6.2MBACh-13 P-13.6.3MBACh-13 P-13.7.1MBACh-13 P-13.7.2MBACh-13 P-13.7.3MBACh-13 P-13.1CCh-13 P-13.2.1CCh-13 P-13.2.2CCh-13 P-13.3.1CCh-13 P-13.3.2CCh-13 P-13.4CCh-13 P-13.5.1CCh-13 P-13.5.2CCh-13 P-13.6CCh-13 P-13.7C

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

Once you have a job, what steps can you take to be successful?

Foundations of Business (MindTap Course List)

What is a physical data flow diagram (DFD)?

Pkg Acc Infor Systems MS VISIO CD

EVALUATING RISK AND RETURN Bartman Industriess and Reynolds Inc.s stock prices and dividends, along with the Wi...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

What is meant by catering theory, and how might it impact a firm's dividend policy?

Fundamentals of Financial Management (MindTap Course List)