action (in units) mead iable overhead ced overhead cal overhead Flexible Budget at 80% Capacity 52,000 $ 286,000 52,000 $ 338,000 Actual Results 47,200 $ 331,400 1-18 (Algo) Volume and controllable variances LO F
action (in units) mead iable overhead ced overhead cal overhead Flexible Budget at 80% Capacity 52,000 $ 286,000 52,000 $ 338,000 Actual Results 47,200 $ 331,400 1-18 (Algo) Volume and controllable variances LO F
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:Manuel Company predicts it will operate at 80% of its productive capacity. Its overhead allocation base is DLH and its
standard amount per allocation base is 0.5 DLH per unit. The company reports the following for this period.
Flexible Budget at
80% Capacity
52,000
Actual
Results
47,200
Production (in units)
Overhead
Variable overhead
Fixed overhead
$ 286,000
52,000
Total overhead
$ 338,000
$331,400
Exercise 21-18 (Algo) Volume and controllable variances LO P4
(1) Compute the overhead volume variance. Indicate variance as favorable or unfavorable.
(2) Compute the overhead controllable variance. Indicate variance as favorable or unfavorable.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Compute the overhead volume variance. Indicate variance as favorable or unfavorable. (Indicate the effect of the variance by
selecting favorable, unfavorable, or no variance.)
Volume variance
Volume Variance
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