Factory Overhead Variance Corrections The data related to Shunda Enterprises Inc.'s factory overhead cost for the production of 100,000 units of product are as follows: Actual: Variable factory overhead Fixed factory overhead 494,000 Standard: 132,000 hrs. at $7.30 ($3.50 for variable factory overhead) 963,600 Productive capacity at 100% of normal was 130,000 hours, and the factory overhead cost budgeted at the level of 132,000 standard hours was $956,000. Based on these data, the chief cost accountant prepared the following variance analysis: Variable factory overhead controllable variance: Actual variable factory overhead cost incurred $458,000 Budgeted variable factory overhead for 132,000 hours 462,000 Variance favorable Fixed factory overhead volume variance: Normal productive capacity at 100% Standard for amount produced Productive capacity not used Standard variable factory overhead rate Variance unfavorable Variance 130,000 Variable Factory Overhead Controllable Variance Fixed Factory Overhead Volume Variance Total Factory Overhead Cost Variance 132,000 2,000 x $7.30 $458,000 hrs. 14,600 Total factory overhead cost variance-unfavorable $10,600 Compute the following to assist you in identifying the errors in the factory overhead cost variance analysis. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Round your interim computations to the nearest cent, if required. $ $ $ hrs. Amount -$ 4,000 Favorable/Unfavorable
Factory Overhead Variance Corrections The data related to Shunda Enterprises Inc.'s factory overhead cost for the production of 100,000 units of product are as follows: Actual: Variable factory overhead Fixed factory overhead 494,000 Standard: 132,000 hrs. at $7.30 ($3.50 for variable factory overhead) 963,600 Productive capacity at 100% of normal was 130,000 hours, and the factory overhead cost budgeted at the level of 132,000 standard hours was $956,000. Based on these data, the chief cost accountant prepared the following variance analysis: Variable factory overhead controllable variance: Actual variable factory overhead cost incurred $458,000 Budgeted variable factory overhead for 132,000 hours 462,000 Variance favorable Fixed factory overhead volume variance: Normal productive capacity at 100% Standard for amount produced Productive capacity not used Standard variable factory overhead rate Variance unfavorable Variance 130,000 Variable Factory Overhead Controllable Variance Fixed Factory Overhead Volume Variance Total Factory Overhead Cost Variance 132,000 2,000 x $7.30 $458,000 hrs. 14,600 Total factory overhead cost variance-unfavorable $10,600 Compute the following to assist you in identifying the errors in the factory overhead cost variance analysis. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Round your interim computations to the nearest cent, if required. $ $ $ hrs. Amount -$ 4,000 Favorable/Unfavorable
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
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.
Topic Video
Question
Please do not give solution in image format thanku
Transcribed Image Text:Factory Overhead Variance Corrections
The data related to Shunda Enterprises Inc.'s factory overhead cost for the production of 100,000 units of product are as
follows:
Actual: Variable factory overhead
Fixed factory overhead
Standard: 132,000 hrs. at $7.30 ($3.50 for variable factory overhead)
Productive capacity at 100% of normal was 130,000 hours, and the factory overhead cost budgeted at the level of
132,000 standard hours was $956,000. Based on these data, the chief cost accountant prepared the following variance
analysis:
Variable factory overhead controllable variance:
Actual variable factory overhead cost incurred
$458,000
Budgeted variable factory overhead for 132,000 hours 462,000
Variance favorable
Variance
Variable Factory Overhead Controllable Variance
Fixed Factory Overhead Volume Variance
Total Factory Overhead Cost Variance
Fixed factory overhead volume variance:
Normal productive capacity at 100%
Standard for amount produced
Productive capacity not used
Standard variable factory overhead rate
Variance unfavorable
Total factory overhead cost variance-unfavorable
$10,600
Compute the following to assist you in identifying the errors in the factory overhead cost variance analysis. Enter a
favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Round
your interim computations to the nearest cent, if required.
130,000
132,000
2,000
x $7.30
$458,000
494,000
963,600
$
$
$
hrs.
hrs.
Amount
-$ 4,000
14,600
Favorable/Unfavorable
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education