Answered: Overhead controllable variance Overhead…

Name: Coronado Corporation accumulates the following data relative to jobs
Uploaded: 2024-03-20T06:33:06.000Z
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Description: Coronado Corporation accumulates the following data relative to jobs started and finished during the month of June 2022.Costs and Production DataRaw materials unit costRaw materials unitsDirect labor payrollDirect labor hoursManufacturing overhead i

Business

Accounting

Overhead controllable variance Overhead volume variance SA Favorable Unfavorable

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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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

Coronado Corporation accumulates the following data relative to jobs started and finished during the month of June 2022.
Costs and Production Data
Raw materials unit cost
Raw materials units
Direct labor payroll
Direct labor hours
Manufacturing overhead incurred
Manufacturing overhead applied
Machine hours expected to be used at normal capacity
Budgeted fixed overhead for June
Variable overhead rate per machine hour
Fixed overhead rate per machine hour
Overhead controllable variance $
Overhead volume variance
Actual
$
$4.40
11,000
$177,600
14,800
$242,800
Standard
$4.30
10,100
$174,420
15,300
Overhead is applied on the basis of standard machine hours. 3.20 hours of machine time are required for each direct labor hour. The
jobs were sold for $475,000. Selling and administrative expenses were $40,100. Assume that the amount of raw materials purchased
equaled the amount used.
Compute the overhead controllable variance and the overhead volume variance.
$244,800
49,960
$89,928
$3.20
$1.80
Favorable
Unfavorable

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At the beginning of the year, you estimated the following - Production - 75,000 units Raw Material - 270,000 pounds at a cost of $1,026,000 Direct Labor - 187,500 hours at a cost of $4,125,000 Variable Overhead - 135,000 machine hours at a cost of $567,000 Fixed Overhead - $900,000 At the end of year, the actual results were as follows - Production - 73,000 units Raw Material - 265,720 pounds purchased and used at a cost of $1,036,308 Direct Labor - 179,580 hours at a cost of $3,968,718 Variable Overhead - 133,590 machine hours at a cost of $558,406.20 Fixed Overhead - $891,000
Comment on the statement “A favourable variance is always better than an adverse variance” by considering one behavioural issue involved.
At the beginning of the year, you estimated the following - Production - 75,000 units Raw Material - 270,000 pounds at a cost of $1,026,000 Direct Labor - 187,500 hours at a cost of $4,125,000 Variable Overhead - 135,000 machine hours at a cost of $567,000 Fixed Overhead - $900,000 At the end of year, the actual results were as follows - Production - 73,000 units Raw Material - 265,720 pounds purchased and used at a cost of $1,036,308 Direct Labor - 179,580 hours at a cost of $3,968,718 Variable Overhead - 133,590 machine hours at a cost of $558,406.20 Fixed Overhead - $891,000