Required: Gleason Guitars produces acoustic guitars. The table below contains budget and actual information for the month of June: Note: Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Direct Material Direct Labor Variable Overhead Fixed Overhead Total Manufacturing Costs Actual Costs 325 units $ $ 16,500 27,200 9,250 12,500 65,450 Spending Variance F F U Flexible Budget 325 units Volume Variance U 8,000 U U None U Master Budget 200 units $ $ 15,000 23,000 9,000 11,500 58,500
Required: Gleason Guitars produces acoustic guitars. The table below contains budget and actual information for the month of June: Note: Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Direct Material Direct Labor Variable Overhead Fixed Overhead Total Manufacturing Costs Actual Costs 325 units $ $ 16,500 27,200 9,250 12,500 65,450 Spending Variance F F U Flexible Budget 325 units Volume Variance U 8,000 U U None U Master Budget 200 units $ $ 15,000 23,000 9,000 11,500 58,500
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.
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Gleason Guitars produces acoustic guitars. The table below contains budget and actual information for the month of June:
Note: Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect
(i.e., zero variance).
Direct Material
Direct Labor
Variable Overhead
Fixed Overhead
Total Manufacturing Costs
Actual Costs
325 units
$
$
16,500
27,200
9,250
12,500
65,450
Spending
Variance
[F
F
F
U
TE
Flexible
Budget
325 units
Volume
Variance
U
8,000 U
U
None
U
Master Budget
200 units
$
$
15,000
23,000
9,000
11,500
58,500
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