Russo Corporation manufactured 16,000 air conditioners during November. The overhead cost-allocation base is $31.50 per machine-hour. The following variable overhead data pertain to November: Actual Budgeted Production 16,000 units 18,000 units Machine-hours 7,875 hours 9,000 hours Variable overhead cost per machine-hour: $31.00 $31.50 What is the variable overhead spending variance? A) $4,500 unfavorable B) $3,937.50 unfavorable C) $4,500 favorable D) $3,937.50 favorable What is the variable overhead efficiency variance? A) $3,937.50 favorable B) $3,937.50 unfavorable C) $4,500 favorable D) $4,500 unfavorable What is the total variable overhead flex budget variance A) $7,875 unfavorable B) $3,937.50 unfavorable C) $7,875 favorable D) $3,937.50 favorable

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Russo Corporation manufactured 16,000 air conditioners during November. The overhead cost-allocation base is $31.50 per machine-hour. The following variable overhead data pertain to November:

Actual

Budgeted

Production

16,000 units

18,000 units

Machine-hours

7,875 hours

9,000 hours

Variable overhead cost per machine-hour:

$31.00

$31.50

What is the variable overhead spending variance?

A) $4,500 unfavorable

B) $3,937.50 unfavorable

C) $4,500 favorable

D) $3,937.50 favorable

What is the variable overhead efficiency variance?

A) $3,937.50 favorable

B) $3,937.50 unfavorable

C) $4,500 favorable

D) $4,500 unfavorable

What is the total variable overhead flex budget variance

A) $7,875 unfavorable

B) $3,937.50 unfavorable

C) $7,875 favorable

D) $3,937.50 favorable

Definition Definition Measure used to estimate the difference between the budgeted and annual proportion for a specific accounting year. A favorable budget variance refers to positive variances or gains, while unfavorable or negative variances refer to a shortfall in the budget. A budget variance is indicative of the instances where the actual costs incurred are higher or lower than the estimated costs.

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