company uses direct labor hours as its overhead allocation base. Its standard amount per allocation base is 2 dire nit. A flexible overhead budget at the expected level of production of 5,000 units follows. Flexible Overhead Budget at 5,000 units (88% capacity) $ 204,500 121,500 $ 326,008 During this period, the company actually produced 5,140 units and incurred total overhead costs of $303,000. Variable overhead Fixed overhead Total overhead Enter answers in the tabs below. Required 1 Required 2 Compute the overhead controllable variance and indicate whether it is favorable or unfavorable. Note: Indicate the effect of the variance by selecting favorable, unfavorable, or no variance,
company uses direct labor hours as its overhead allocation base. Its standard amount per allocation base is 2 dire nit. A flexible overhead budget at the expected level of production of 5,000 units follows. Flexible Overhead Budget at 5,000 units (88% capacity) $ 204,500 121,500 $ 326,008 During this period, the company actually produced 5,140 units and incurred total overhead costs of $303,000. Variable overhead Fixed overhead Total overhead Enter answers in the tabs below. Required 1 Required 2 Compute the overhead controllable variance and indicate whether it is favorable or unfavorable. Note: Indicate the effect of the variance by selecting favorable, unfavorable, or no variance,
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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:A company uses direct labor hours as its overhead allocation base. Its standard amount per allocation base is 2 direct labor hours per
unit. A flexible overhead budget at the expected level of production of 5,000 units follows.
Flexible Overhead Budget at
5,000 units (80% capacity)
$ 204,500
121,500
$ 326,000
Variable overhead
Fixed overhead
Total overhead
During this period, the company actually produced 5,140 units and incurred total overhead costs of $303,000.
Enter answers in the tabs below.
Required 1 Required 2
Compute the overhead controllable variance and indicate whether it is favorable or unfavorable.
Note: Indicate the effect of the variance by selecting favorable, unfavorable, or no variance,
Controllable variance
Controllable variance
Required 2 >
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