Exam 8: Flexible Budgets, Variances, and Management Control: II

Explain why there is no efficiency variance for fixed manufacturing overhead costs.

During October Foxmore Inc.used $250,000 in manufacturing overhead costs, of which $66,500 was variable.Budgeted manufacturing overhead was $229,500, of which $75,000 was variable.Which of the following entries for manufacturing overhead could have been recorded?

Describe if the production-volume variance is favourable or unfavourable for each of the following situations; and, provide the ASPE/IFRS treatment for the disposition of the variance. 1.actual output is less than expected 2.actual output is more than expected but still considered a usual fluctuation 3.actual output is more than expected and is abnormally high

The difference between budgeted fixed overhead and fixed overhead allocated for actual output units achieved, is the production-volume variance.

Answer the following question(s)using the information below.Lukehart Industries Inc.produces air purifiers in batches.To manufacture a batch of the purifiers Lukehart Inc.must setup the machines and assembly line tooling.Setup costs are batch-level costs because they are associated with batches rather than individual units of products.A separate Setup Department is responsible for setting up machines and tooling for different models of the air purifiers.Setup overhead costs consist of some costs that are variable and some costs that are fixed with respect to the number of setup hours.The following information pertains to June 2012: -Calculate the rate variance for variable setup overhead costs.

Everjoice Company makes clocks.The budgeted fixed overhead costs for 2018 total $720,000.The company uses direct labour-hours for fixed overhead allocation and anticipates 240,000 hours during the year for 480,000 units.An equal number of units are budgeted for each month.During June, 42,000 clocks were produced and $63,000 were spent on fixed overhead.Required: a.Determine the fixed overhead rate for 2018 based on units of input. b.Determine the fixed overhead static-budget variance for June. c.Determine the production-volume overhead variance for June.

Zebra Jewellers planned to produce 1,800 necklaces during March with a total overhead budget of $49,600.However, while manufacturing the 2,000th necklace the microcomputer that contained the month's cost information broke down.With the computer out of commission, the accountant has been unable to complete the variance analysis report.The missing information of the report is lettered in the following set of data: Variable overhead: Fixed overhead: Required: Compute the missing elements in the report represented by the lettered items.

A favourable production-volume variance indicates that the company

Answer the following question(s)using the information below.Rutch Corporation manufactured 54,000 door jambs during September.The fixed-overhead cost allocation rate is $50.00 per machine-hour.The following fixed overhead data pertain to September: -What is the fixed overhead rate variance?

Fatal Inc.manufactures parachutes.Fixed and variable manufacturing cost pools are allocated to each parachute using budgeted assembly hours.Budgeted assembly time is 4 hours per unit.The following table presents the amounts for July. Required: a.Calculate the efficiency variance for variable overhead costs. b.Calculate the rate variance for variable overhead costs. c.Calculate the rate variance for fixed overhead costs. d.Calculate the production-volume variance for fixed overhead costs.

McKenna Company planned to produce 900 units during April with a total overhead budget of $12,400.However, while manufacturing the 1,000 units the microcomputer that contained the month's cost information broke down.With the computer out of commission, the accountant has been unable to complete the variance analysis report.The information missing from the report is lettered in the following set of data: Variable overhead: Fixed overhead: Required: Compute the missing elements in the report represented by the lettered items

When separate variable and fixed manufacturing overhead control accounts are used for job costing, it is not necessary to have separate overhead allocated accounts.

Managers should use unitized fixed manufacturing overhead costs for planning and control.

The Saskatchewan division of a Canadian farm machinery company uses a standard cost system for its machine-based production of grain drying equipment.Data regarding production for April are as follows: Required: 1.Prepare the necessary journal entries to account for the fixed manufacturing overhead incurred and allocated to production.2.Prepare the journal entry to close the fixed overhead variance accounts assuming that the fluctuation in denominator level is considered to be normal.

Answer the following question(s)using the information below.Munoz Inc.produces a special line of plastic toy racing cars in batches.To manufacture a batch of the cars Munoz Inc.must setup the machines and molds.Setup costs are batch-level costs because they are associated with batches rather than individual units of products.A separate Setup Department is responsible for setting up machines and molds for different styles of car.Setup overhead costs consist of some costs that are variable and some costs that are fixed with respect to the number of setup hours.The following information pertains to June 2012: -Calculate the production-volume variance for fixed setup overhead costs.

The fixed overhead flexible budget variance is the same as the fixed overhead static budget variance.

Answer the following question(s)using the information below.Willis Corporation manufactures industrial-sized gas furnaces and uses budgeted machine-hours to allocate variable manufacturing overhead.The following information pertains to the company's manufacturing overhead data: -What is the variable overhead rate variance?

Capacity cost is a variable overhead cost.

Ever-Sharp Lawnmowers Ltd.controls variable manufacturing overhead costs with assembly-line hours as the denominator.Fixed manufacturing overhead costs are applied on a unit-of-output basis.Each lawnmower is allowed 10 assembly-line hours and standard variable manufacturing overhead totals $650 per unit.Budgeted fixed manufacturing overhead totals $29,400 for 420 lawnmowers.During July 4,200 assembly-line hours were incurred and 400 lawnmowers were produced.Actual manufacturing overhead costs for July were $260,400 for variable expenses and $32,300 for fixed expenses.Required: a.Compute a 4-variance analysis for the month of July. b.Compute a 3-variance analysis for the month of July. c.Compute a 2-variance analysis for the month of July.

Use the information below to answer the following question(s).Michelle Inc.uses a level 4-variance analysis of its manufacturing overhead costs, and has the following results for April.A.Budgeted direct labour-hours per unit is used to allocate variable manufacturing overhead.Fixed overhead is allocated on a per unit basis. b.Budgeted amounts for April are: C.Actual amounts for April are: -What is the Michelle Inc.variable manufacturing overhead rate variance?