Exercise 16-42 (Static) Fixed Cost Variances (LO 16-6) Information on Carney Company's fixed overhead costs follows: Overhead applied $ 360,000 Actual overhead 385,500 Budgeted overhead 369,000 Required: What are the fixed overhead price and production volume variances? (Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)
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.
Exercise 16-42 (Static) Fixed Cost Variances (LO 16-6)
Information on Carney Company's fixed
| Overhead applied | $ | 360,000 | |
| Actual overhead | 385,500 | ||
| Budgeted overhead | 369,000 | ||
Required:
What are the fixed overhead price and production volume variances? (Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)
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