menu
bartleby
search
close search
Hit Return to see all results
close solutoin list

Variances Refer to Cornerstone Exercise 9.6. Required: 1. Calculate the variable overhead spending variance using the formula approach. (If you compute the actual variable overhead rate, carry your computations out to five significant digits and round the variance to the nearest dollar.) 2. Calculate the variable overhead efficiency variance using the formula approach. 3. Calculate the variable overhead spending variance and variable overhead efficiency variance using the three-pronged graphical approach. 4. What if 26,100 direct labor hours were actually worked in February? What impact would that have had on the variable overhead spending variance? On the variable overhead efficiency variance? Standish Company manufactures consumer products and provided the following information for the month of February: Required: 1. Calculate the fixed overhead spending variance using the formula approach. 2. Calculate the volume variance using the formula approach. 3. Calculate the fixed overhead spending variance and volume variance using the three-pronged graphical approach. 4. What if 129,600 units had actually been produced in February? What impact would that have had on the fixed overhead spending variance? On the volume variance?

BuyFindarrow_forward

Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663

Solutions

Chapter
Section
BuyFindarrow_forward

Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663
Chapter 9, Problem 7CE
Textbook Problem
78 views

Variances

Refer to Cornerstone Exercise 9.6.

Required:

  1. 1. Calculate the variable overhead spending variance using the formula approach. (If you compute the actual variable overhead rate, carry your computations out to five significant digits and round the variance to the nearest dollar.)
  2. 2. Calculate the variable overhead efficiency variance using the formula approach.
  3. 3. Calculate the variable overhead spending variance and variable overhead efficiency variance using the three-pronged graphical approach.
  4. 4. What if 26,100 direct labor hours were actually worked in February? What impact would that have had on the variable overhead spending variance? On the variable overhead efficiency variance?

Standish Company manufactures consumer products and provided the following information for the month of February:

Chapter 9, Problem 7CE, Variances Refer to Cornerstone Exercise 9.6. Required: 1. Calculate the variable overhead spending

Required:

  1. 1. Calculate the fixed overhead spending variance using the formula approach.
  2. 2. Calculate the volume variance using the formula approach.
  3. 3. Calculate the fixed overhead spending variance and volume variance using the three-pronged graphical approach.
  4. 4. What if 129,600 units had actually been produced in February? What impact would that have had on the fixed overhead spending variance? On the volume variance?

1.

To determine

Compute the variable overhead spending variance using formula approach.

Explanation of Solution

Overhead Variance: The overhead variance is the difference between the real overhead consumed in the production of a product, and the estimated overhead determined in the production of that product.

Favorable Cost Variance: This refers to the variance which is caused when the actual costs are less than the standard cost. The favorable cost variance is the indication that the revenues are greater than what was anticipated.

Unfavorable Cost Variance: This refers to the variance which is caused when the actual costs are more and the standard costs are less. The unfavorable cost variance is the indication that the revenues are lesser than what was anticipated.

Spending variances: It arises when management pays an amount which is different from the standard price for purchasing an item. The variable overhead spending variance measures the total effect of differences in the actual variable overhead rate (AVOR) and the standard variable overhead rate (SVOR).

Compute the variable overhead spending variance using formula approach:

Variable overhead spending variance = [

2.

To determine

Compute the variable overhead efficiency variance using formula approach.

3.

To determine

Compute the variable overhead spending variance and efficiency variance using three-pronged graphical approach.

4.

To determine

Ascertain the effect on the variable overhead spending variance and efficiency variance, if there is a change in actual labor hour (26,100) in February.

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 9 Solutions

Cornerstones of Cost Management (Cornerstones Series)
Show all chapter solutions
add
Ch. 9 - Explain why the variable overhead spending...Ch. 9 - What is the cause of an unfavorable volume...Ch. 9 - What are control limits, and how are they set?Ch. 9 - Explain how the two-, three-, and four-variance...Ch. 9 - Explain what mix and yield variances are.Ch. 9 - Guillermos Oil and Lube Company is a service...Ch. 9 - Direct Materials Usage Variance Refer to...Ch. 9 - Refer to Cornerstone Exercise 9.1. Guillermos Oil...Ch. 9 - Kavallia Company set a standard cost for one item...Ch. 9 - Yohan Company has the following balances in its...Ch. 9 - Standish Company manufactures consumer products...Ch. 9 - Variances Refer to Cornerstone Exercise 9.6....Ch. 9 - Standish Company manufactures consumer products...Ch. 9 - Mangia Pizza Company makes frozen pizzas that are...Ch. 9 - Mangia Pizza Company makes frozen pizzas that are...Ch. 9 - Refer to Cornerstone Exercise 9.9. Required: 1....Ch. 9 - Quincy Farms is a producer of items made from farm...Ch. 9 - During the year, Dorner Company produced 280,000...Ch. 9 - Zoller Company produces a dark chocolate candy...Ch. 9 - Oerstman, Inc., uses a standard costing system and...Ch. 9 - Refer to the data in Exercise 9.15. Required: 1....Ch. 9 - Chypre, Inc., produces a cologne mist using a...Ch. 9 - Refer to Exercise 9.17. Chypre, Inc., purchased...Ch. 9 - Delano Company uses two types of direct labor for...Ch. 9 - Jameson Company produces paper towels. The company...Ch. 9 - Madison Company uses the following rule to...Ch. 9 - Laughlin, Inc., uses a standard costing system....Ch. 9 - Responsibility for the materials price variance...Ch. 9 - Which of the following is true concerning labor...Ch. 9 - A company uses a standard costing system. At the...Ch. 9 - Relevant information for direct labor is as...Ch. 9 - Which of the following is the most likely...Ch. 9 - Haversham Corporation produces dress shirts. The...Ch. 9 - Plimpton Company produces countertop ovens....Ch. 9 - Algers Company produces dry fertilizer. At the...Ch. 9 - Misterio Company uses a standard costing system....Ch. 9 - Petrillo Company produces engine parts for large...Ch. 9 - Business Specialty, Inc., manufactures two...Ch. 9 - Vet-Pro, Inc., produces a veterinary grade...Ch. 9 - Refer to the data in Problem 9.34. Vet-Pro, Inc.,...Ch. 9 - Energy Products Company produces a gasoline...Ch. 9 - Nuevo Company produces a single product. Nuevo...Ch. 9 - Ingles Company manufactures external hard drives....Ch. 9 - As part of its cost control program, Tracer...Ch. 9 - Aspen Medical Laboratory performs comprehensive...Ch. 9 - Leather Works is a family-owned maker of leather...

Additional Business Textbook Solutions

Find more solutions based on key concepts
Show solutions add
TIME VALUE OF MONEY ANALYSIS You have applied for a job with a local bank. As part of its evaluation process, y...

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

How does a note receivable differ from an account receivable?

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)

Is an initial public offering an example of a primary or a secondary market transaction? Explain.

Fundamentals of Financial Management, Concise Edition (MindTap Course List)

Discuss target market strategies

MKTG 12:STUDENT ED.-TEXT

Explain how a market supply curve is derived.

Economics (MindTap Course List)

What are the major elements of Taylors scientific management?

Foundations of Business (MindTap Course List)