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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MANAGERIAL ACCOUNTING ACCT 2302 >IC<
- Acme Inc. has the following information available: A. Compute the material price and quantity, and the labor rate and efficiency variances. B. Describe the possible causes for this combination of favorable and unfavorable variances.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_forwardThe 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_forward
- Performance Report for Variable Variances Humo Company provided the following information: Required: Prepare a performance report that shows the variances for each variable overhead item (inspection and power).arrow_forwardVariable Overhead Spending and Efficiency Variances, Columnar and Formula Approaches Rath Company provided the following information: Required: 1. Using the columnar approach, calculate the variable overhead spending and efficiency variances. 2. Using the formula approach, calculate the variable overhead spending variance. 3. Using the formula approach, calculate the variable overhead efficiency variance. 4. Calculate the total variable overhead variance.arrow_forwardExplain how the two-, three-, and four-variance overhead analyses are related.arrow_forward
- Performance Report for Variable Variances Potter Company provided the following information: Required: Prepare a performance report that shows the variances for each variable overhead item (inspection and power).arrow_forwardVariable Overhead Spending and Efficiency Variances, Columnar and Formula Approaches Aretha Company provided the following information: Required: 1. Using the columnar approach, calculate the variable overhead spending and efficiency variances. 2. Using the formula approach, calculate the variable overhead spending variance. 3. Using the formula approach, calculate the variable overhead efficiency variance. 4. Calculate the total variable overhead variance.arrow_forwardFixed Overhead Spending and Volume Variances, Columnar and Formula Approaches Branch Company provided the following information: Required: 1. Using the columnar approach, calculate the fixed overhead spending and volume variances. 2. Using the formula approach, calculate the fixed overhead spending variance. 3. Using the formula approach, calculate the fixed overhead volume variance. 4. Calculate the total fixed overhead variance.arrow_forward
- Fixed Overhead Spending and Volume Variances, Columnar and Formula Approaches Corey Company provided the following information: Required: 1. Using the columnar approach, calculate the fixed overhead spending and volume variances. 2. Using the formula approach, calculate the fixed overhead spending variance. 3. Using the formula approach, calculate the fixed overhead volume variance. 4. Calculate the total fixed overhead variance.arrow_forwardThe budget variance for variable production costs is broken down into quantity and price variances. Explain why the quantity variance is more useful for control purposes than the price variance.arrow_forwardThe president of McGrade Industries wants an analysis prepared to help explain why the variances computed in requirement 1 occurred. Using the worksheet called PRIMEVAR that follows these requirements, calculate the material and labor variances for McGrade Industries. The problem requires you to enter the input in the Data Section as well as formulas in the Answer Section.arrow_forward
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