ent, calculate the flexible budget, the spending and the efficiency variances for variable manufacturing overhead. Classify the variances as Favourable /Unfavourable. Flexible budget variance Spending variance Efficiency Variance
ent, calculate the flexible budget, the spending and the efficiency variances for variable manufacturing overhead. Classify the variances as Favourable /Unfavourable. Flexible budget variance Spending variance Efficiency Variance
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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:The following pertains to Questions 27, 28, and 29
Variance Industries, Ltd. creates problems for accounting students. At the end of the first quarter of
2021, you have been asked to prepare a variance analysis of the company's operations for the quarter
recently ended. You have gathered the data below from the company's accounts and the static budget
prepared in December 2020. Variable and fixed manufacturing overhead are allocated based on direct-
labour dollars.
Units manufactured and sold
Sales revenue
Variable costs
Direct materials
Direct labour
Variable manufacturing overhead
Total variable costs
Contribution margin
Fixed manufacturing overhead
Operating income (loss)
Actual results Static budget
10,000
12,000
$320,000
$50,000
125,000
29,000
204,000
116,000
73,000
43,000
$360,000
$60,000
120,000
24,000
204,000
156,000
72,000
84,000
Transcribed Image Text:ent, calculate the flexible budget, the spending and the
efficiency variances for variable manufacturing overhead. Classify the variances as Favourable
/Unfavourable.
Flexible budget variance
Spending variance
Efficiency Variance
$
$
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