Identifying favorable and unfavorable variances. Tred-America, Inc., manufactures tires for largeauto companies. It uses standard costing and allocates variable and fixed manufacturing overhead based onmachine-hours. For each independent scenario given, indicate whether each of the manufacturing varianceswill be favorable or unfavorable or, in case of insufficient information, indicate "CBD" (cannot be determined).FixedVariableVariableFixedOverheadOverheadOverheadOverheadProduction-SpendingEfficiencyVarianceSpendingVarianceVolumeScenarioVarianceVarianceProduction output is 8% more thanbudgeted, and actual fixed manufacturingoverhead costs are 7% less than budgetedProduction output is 11% more thanbudgeted; actual machine-hours are 5%less than budgetedProduction output is 15% less thanbudgetedActual machine-hours are 18% greaterthan flexible-budget machine-hoursRelative to the flexible budget, actualmachine-hours are 10% greater, and actualvariable manufacturing overhead costs are15% less

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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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1. Compute for Spending Variance 2. Compute for Variable Overhead Efficiency Variance 3. Compute for Controllable Variance
Compute for the variances of the problem using the information given. Answer the numbers only up to two decimal places. A. Compute for Labor Efficiency Variance B. Compute for Labor Spending Variance C. Compute for Labor Rate Variance
What is the variation in the use of materials at actual price and standard materials at standard price? Select one: Material quantity variance Material mix variance Material yield variance Material price variance In determining the standard factory overhead rate, which level of capacity is used? Select one: Maximum capacity Expected actual capacity Practical capacity Normal capacity One way of analyzing the fixed factory overhead variance is breaking it down into Select one: Efficiency and capacity variances Spending and volume variance Efficiency and volume variance Spending and budget variance Setting standards Select one: Should be done to make them as tight as possible Is largely a matter of calculating rates and quantities Has important behavioral implications Is done only for manufacturing activities A major drawback to setting standards based on historical results is that such standards Select one: Are usually not well received by workers Are harder to…
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If materlals are purchased on account and the the actual price pald for materlals Is less than the standard price, the journal entry would Include: Multiple Choice debit to Work in Process, debit to Material Price Variance, credit to Raw Materials debit to Work in Process, credit to Material Price Variance, credit to Raw Materials debit to Raw Materials, credit to Material Price Variance, credit to Accounts Payable debit to Raw Materials, debit to Material Price Variance, credit to AcCounts Payable
Which of the following is a value-added activity? a.waiting b.inspection c.processing d.moving Which of the following statements is characteristic of overhead? a.The adjusted cost of goods sold is equal to the normal cost of goods manufactured plus or minus the overhead variance. b.Variances in overhead are expected every other month. c.lf the overhead variance shows overapplied overhead, then that amount would be subtracted from normal cost of goods sold. d.lf the overhead variance shows underapplied overhead, then that amount would be subtracted from normal cost of goods sold. Which accounting method is used for external reporting? a.absorption costing b.transfer price costing c.variable costing d.responsibility costing
Best, Inc. uses a standard cost system and provides the following information. (Click the icon to view the information.) variable overhead, $3,800; actual fixed overhead, $3, 500; actual direct labor hours, 1,400. Read the requirements. Data table Requirement 1. Compute the variable overhead cost and efficiency variances and fixed overhead cost and volume variances. Begin with the variable overhead cost and efficiency variances. Select the required formulas, compute the variable overhead cost and favorable (F) or unfavorable (U). (Abbreviations used: AC = actual cost; AQ = actual quantity; FOH = fixed overhead; SC = standardco \table [[,, Formula,Variance], [VOH cost variance, = , 1 = , ], [VOH efficiency variance, =,1 =, 0
1. Using the four-variance approach, what is the volume variance? 2. Using the four-variance approach, what is the fixed overhead spending? 3. Using the four-variance approach, what is the variable overhead efficiency variance? 4. Using the four-variance approach, what is the variable overhead spending variance?
If a company uses predetermined rate for absorption of manufacturing overhead, the volume variance is O The under- or over-applied fixed cost element of overhead. O The difference between budgeted cost and actual cost of variable overhead items. O The difference between budgeted cost and actual cost of fixed overhead items. O The under- or over-applied variable cost element of overhead.
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