Fogel Company expects to produce and sell 114,000 units for the period. The company's flexible budget for 114,000 units shows variable overhead costs of $159,600 and fixed overhead costs of $132,000. The company incurred actual total overhead costs of $254,800 while producing 108,000 units, a. Compute the total variable overhead costs for the flexible budget when producing 108,000 units. b. Compute the budgeted (flexible) total overhead when producing 108,000 units. c. Compute the controllable variance and identify it as favorable or unfavorable. (Round "Variable amount per unit" to 2 decimal places.)
Fogel Company expects to produce and sell 114,000 units for the period. The company's flexible budget for 114,000 units shows variable overhead costs of $159,600 and fixed overhead costs of $132,000. The company incurred actual total overhead costs of $254,800 while producing 108,000 units, a. Compute the total variable overhead costs for the flexible budget when producing 108,000 units. b. Compute the budgeted (flexible) total overhead when producing 108,000 units. c. Compute the controllable variance and identify it as favorable or unfavorable. (Round "Variable amount per unit" to 2 decimal places.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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:Fogel Company expects to produce and sell 114,000 units for the period. The company's flexible budget for 114,000 units shows
variable overhead costs of $159,600 and fixed overhead costs of $132,000. The company incurred actual total overhead costs of
$254,800 while producing 108,000 units,
a. Compute the total variable overhead costs for the flexible budget when producing 108,000 units
b. Compute the budgeted (flexible) total overhead when producing 108,000 units.
c. Compute the controllable variance and Identify it as favorable or unfavorable. (Round "Variable amount per unit" to 2 decimal
places.)
Variable Costs
Fixed Costs
Budgeted (flexible) overhead
ance.
Variable Amount per
Unit
Controllable Variance
1.40
Total Fixed Cost
---Flexible Budget at---
114,000 units
$
$
159,600
132,000
291,600
108,000 units
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