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Réquired: A. Compute the company's total cost variance for variable overhead and fixed overhead if the firm uses a static budget to help assess performance. B. Compute the company's total cost variance for variable overhead and fixed overhead if the firm uses a flexible budget to help assess performance. C. Which of the two budgets (static or flexible) is preferred for performance evaluations?

Réquired: A. Compute the company's total cost variance for variable overhead and fixed overhead if the firm uses a static budget to help assess performance. B. Compute the company's total cost variance for variable overhead and fixed overhead if the firm uses a flexible budget to help assess performance. C. Which of the two budgets (static or flexible) is preferred for performance evaluations?

FINANCIAL ACCOUNTING
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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Prevlar's budget for variable overhead and fixed overhead revealed the following information for an anticipated 40,100 hours of activity: variable overhead, $352,880; fixed overhead, $602,500. The company actually worked 43,100 hours and actual overhead incurred was: variable, $367,500; fixed, $610,000. Required: A. Compute the company's total cost variance for variable overhead and fixed overhead if the firm uses a static budget to help assess performance. B. Compute the company's total cost variance for variable overhead and fixed overhead if the firm uses a flexible budget to help assess performance. C. Which of the two budgets (static or flexible) is preferred for performance evaluations? A. Actual $ 977,500 Less: Static budget 955,380 22,120 Variance, unfavorable $ B. Flexible budget $ 977,500 Less: Actual Variance, favorable C. Preferred for performance evaluations? Flexible budget
Transcribed Image Text:Prevlar's budget for variable overhead and fixed overhead revealed the following information for an anticipated 40,100 hours of activity: variable overhead, $352,880; fixed overhead, $602,500. The company actually worked 43,100 hours and actual overhead incurred was: variable, $367,500; fixed, $610,000. Required: A. Compute the company's total cost variance for variable overhead and fixed overhead if the firm uses a static budget to help assess performance. B. Compute the company's total cost variance for variable overhead and fixed overhead if the firm uses a flexible budget to help assess performance. C. Which of the two budgets (static or flexible) is preferred for performance evaluations? A. Actual $ 977,500 Less: Static budget 955,380 22,120 Variance, unfavorable $ B. Flexible budget $ 977,500 Less: Actual Variance, favorable C. Preferred for performance evaluations? Flexible budget
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