Acme Company's production budget for August is 17,900 units and includes the following component unit costs: direct materials, $8.0; direct labor, $10.4; variable overhead, $6.0. Budgeted fixed overhead is $36,000. Actual production in August was 18,135 units. Actual unit component costs incurred during August include direct materials, $8.60; direct labor, $9.80; variable overhead, $7.20. Actual fixed overhead was $37,900. The standard variable overhead rate per unit consists of $6.0 per machine hour
Acme Company's production budget for August is 17,900 units and includes the following component unit costs: direct materials, $8.0; direct labor, $10.4; variable overhead, $6.0. Budgeted fixed overhead is $36,000. Actual production in August was 18,135 units. Actual unit component costs incurred during August include direct materials, $8.60; direct labor, $9.80; variable overhead, $7.20. Actual fixed overhead was $37,900. The standard variable overhead rate per unit consists of $6.0 per machine hour
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text:Acme Company's production budget
for August is 17,900 units and includes
the following component unit costs:
direct materials, $8.0; direct labor,
$10.4; variable overhead, $6.0.
Budgeted fixed overhead is $36,000.
Actual production in August was
18,135 units. Actual unit component
costs incurred during August include
direct materials, $8.60; direct labor,
$9.80; variable overhead, $7.20. Actual
fixed overhead was $37,900. The
standard variable overhead rate per
unit consists of $6.0 per machine hour
and each unit is allowed a standard of
1 hour of machine time. During August,
$130,572 of actual variable overhead
cost was incurred for 20,088 machine
hours.
Required:
Calculate the variable overhead
spending variance and the variable
overhead efficiency variance. (Do not
round intermediate calculations.
Indicate the effect of each variance by
selecting "F" for favorable, "U" for
unfavorable, and "None" for no effect
(i.e., zero variance).
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