Answered: Haley Fans manufactures and distributes…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Haley Fans manufactures and distributes circulators. The standard and actual costs for the manufacture of circulators are as follows:

Standard Costs	Actual Costs
Variable cost, $22 per unit	Total variable cost, $12,300
Fixed cost, $40 per unit	Total fixed cost, $17,520

Budgeted factory overhead was $29,140. Overhead applied is based on the number of circulator units produced. The company estimated that 470 circulators would be produced, however 480 were produced. How much is Haley’s controllable overhead variance?

		$480 unfavorable
		$350 unfavorable
		$450 unfavorable
		$460 unfavorable
		$830 unfavorable

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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