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Concept explainers
Concept introduction:
Variable overhead expenditure variance-The variable overhead expenditure variance is the difference between real costs for variable overhead and predicted costs based on standards.
Variable overhead efficiency variance-The difference between the number of hours, variable production overhead per unit and the number of hours predicted.
Requirement 1:
Expenditure and efficiency variable overhead.
Concept introduction:
Expenditure fixed overhead-The fixed overhead expenditure variance is the difference between the real fixed overhead expense incurred and the
Volume fixed overhead- Fixed overhead volume variance is the difference between fixed overhead applied to goods manufactured in a period and the total fixed overhead predicted.
To explain:
Expenditure and volume fixed overhead variance.
Concept introduction:
The controllable variance refers usually applied to factory overhead where the calculation of the controllable variance is: Real overhead expense - (forecasted overhead per unit × standard number of units)
Requirement 3:
Controllable variance.
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Chapter 8 Solutions
MANAGERIAL ACCOUNTING FUND. W/CONNECT
- What two factors must be considered when breaking down a variance into its components?arrow_forwardThe variable overhead rate variance is caused by the sum between which of the following? A. actual and standard allocation base B. actual and standard overhead rates C. actual and budgeted units D. actual units and actual overhead ratesarrow_forwardWhat makes a variance favorable? Give an example of a favorable variance involving materials. What makes a variance unfavorable? Give an example of an unfavorable variance involving labor.arrow_forward
- The variable overhead efficiency variance is caused by the difference between which of the following? A. actual and budgeted units B. actual and standard allocation base C. actual and standard overhead rates D. actual units and actual overhead ratesarrow_forwardCompute for controllable variance.arrow_forwardIn 2 way variance analysis, materials, labor and variable overhead variances maybe broken down to ________ variances. A. Price and spending B. Quantity and time C. spending and efficiency D. spending and capacityarrow_forward
- in preparing variance analysis for both variable overhead and fixed overhead costs, both include spending variancesarrow_forwardFrom the foregoing information, compute the following variances and indicate whether they are favorable (F) or unfavorable (U). State why each of the variances occurred. Material price variance and Material usage variance Direct labour rate variance and Direct labour efficiency variance Variable overhead spending variance and Variable overhead efficiency variancearrow_forwardTo calculate variable overhead spending variance, efficiency variance and total variable overhead variance.arrow_forward
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