Create a narrative explanation for the variances. Create a scenario, context, or circumstance that can hypothetically account for the variance's nature and cause. Make a recommendation based on the variance calculated. Carry out this procedure for Overhead only.
Create a narrative explanation for the variances. Create a scenario, context, or circumstance that can hypothetically account for the variance's nature and cause. Make a recommendation based on the variance calculated. Carry out this procedure for Overhead only.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Create a narrative explanation for the variances. Create a scenario, context, or circumstance that can hypothetically account for the variance's nature and cause. Make a recommendation based on the variance calculated. Carry out this procedure for Overhead only.
![Problem 3 - Golden Shower Company
5,000 DLHPS.
Per DLHr
1.00
Total
5,000
Std. hrs./unit = 5.,000 DLHrs.
4,000 units
Fixed
1.50
2.50
Variable 7,500
Total
12.500
= 1.25 Hrs./unit
Materials
1. Actual price
Std. price
Difference
X actual qty.
P 1.02
(1,00)
.02
2. Actual qty. 7,200
Std.(3,500 x 2) 7.000
Difference
x Std. price
MQV
200
1.00
200 U
7.200
MPV
144 U.
Labor
1. Actual rate (33,750/4,500) 7,50
(8.00)
( 0.50)
4,500
(2,250) F
4,500
Std. hrs. (3,500 x 1.25) 4,375
125
2/ Actual hrs.
Std. rate
Difference
X actual hrs.
LRV
Difference
x Std. rate
LEV
8.00
1.000U
Factory overhead
1. Actual overhead
11.250.00
Less: Budget allowed on std. hrs.
Fixed
Variable (4,375 x 1.50) 6,562.50
5,000
11,562.50
312.50) F
Controllable variance
2. Budget allowed on std hrs.
Less: OH applied to production
(4,3,75 x 2.50)
11,562.50
10,937.50
625.00
Volume variance](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F64771930-1c40-4156-a952-6334b4772115%2F571f782f-a5ce-4688-a373-1de33884f378%2F6x8hw5g_processed.png&w=3840&q=75)
Transcribed Image Text:Problem 3 - Golden Shower Company
5,000 DLHPS.
Per DLHr
1.00
Total
5,000
Std. hrs./unit = 5.,000 DLHrs.
4,000 units
Fixed
1.50
2.50
Variable 7,500
Total
12.500
= 1.25 Hrs./unit
Materials
1. Actual price
Std. price
Difference
X actual qty.
P 1.02
(1,00)
.02
2. Actual qty. 7,200
Std.(3,500 x 2) 7.000
Difference
x Std. price
MQV
200
1.00
200 U
7.200
MPV
144 U.
Labor
1. Actual rate (33,750/4,500) 7,50
(8.00)
( 0.50)
4,500
(2,250) F
4,500
Std. hrs. (3,500 x 1.25) 4,375
125
2/ Actual hrs.
Std. rate
Difference
X actual hrs.
LRV
Difference
x Std. rate
LEV
8.00
1.000U
Factory overhead
1. Actual overhead
11.250.00
Less: Budget allowed on std. hrs.
Fixed
Variable (4,375 x 1.50) 6,562.50
5,000
11,562.50
312.50) F
Controllable variance
2. Budget allowed on std hrs.
Less: OH applied to production
(4,3,75 x 2.50)
11,562.50
10,937.50
625.00
Volume variance
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