**Factory Overhead Cost Variance Analysis**This section guides you through identifying errors in factory overhead cost variance analysis. A favorable variance is indicated by a negative number using a minus sign, while an unfavorable variance is noted as a positive number. If needed, round your interim computations to the nearest cent.**Variance Types:**1. **Variable Factory Overhead Controllable Variance** - Amount: [Input Field] - Favorable/Unfavorable: [Dropdown Menu]2. **Fixed Factory Overhead Volume Variance** - Amount: [Input Field] - Favorable/Unfavorable: [Dropdown Menu]3. **Total Factory Overhead Cost Variance** - Amount: [Input Field] - Favorable/Unfavorable: [Dropdown Menu]Compute these fields to determine the cost variances accurately, ensuring proper financial analysis and reporting. ## Factory Overhead Variance Corrections### OverviewThe following data pertains to Shunda Enterprises Inc.'s factory overhead cost for producing 50,000 units:- **Actual Costs:** - **Variable Factory Overhead:** $263,300 - **Fixed Factory Overhead:** $188,800- **Standard Costs:** - **Standard Hours:** 76,000 hours at $6/hour (including $3.50 for variable overhead) totaling $456,000### Productive Capacity- **100% Productive Capacity:** 75,200 hours- **Budgeted Overhead Cost for 76,000 Hours:** $453,300### Variance Analysis1. **Variable Factory Overhead Controllable Variance:** - **Actual Cost Incurred:** $263,300 - **Budgeted Cost for 76,000 Hours:** $266,000 - **Variance Outcome:** Favorable variance of $2,700, indicating effective cost management within the variable costs.2. **Fixed Factory Overhead Volume Variance:** - **100% Normal Capacity:** 75,200 hours - **Standard for Actual Production:** 76,000 hours - **Capacity Not Used:** 800 hours - **Standard Variable Overhead Rate:** $6 per hour - **Variance Outcome:** Unfavorable variance of $4,800, highlighting underutilization of facility capacity which led to inefficiencies.### Total Variance- **Overall Total Factory Overhead Variance:** $2,100 Unfavorable### ConclusionThe analysis reflects a strategic strength in controlling variable costs while indicating an area for improvement in optimizing fixed overhead by utilizing full productive capacity. Adjustments might be necessary to align production activities more closely with budgeted estimates to improve efficiency.

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Description: **Factory Overhead Cost Variance Analysis**This section guides you through identifying errors in factory overhead cost variance analysis. A favorable variance is indicated by a negative number using a minus sign, while an unfavorable variance is not

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The data related to Shunda Enterprises Inc.'s factory overhead cost for the production of 50,000 units of product are as follows: Actual: Variable factory overhead $263,300 Fixed factory overhead 188,800 Standard: 76,000 hrs. at $6 ($3.50 for variable factory overhead) 456,000 Productive capacity at 100% of normal was 75,200 hours, and the factory overhead cost budgeted at the level of 76,000 standard hours was $453,300. Based on these data, the chief cost accountant prepared the following variance analysis: Variable factory overhead controllable variance: Actual variable factory overhead cost incurred $263,300 Budgeted variable factory overhead for 76,000 hours (266,000) Variance-favorable $(2,700) Fixed factory overhead volume variance: Normal productive capacity at 100% 75,200 hrs. Standard for amount produced (76,000) Productive capacity not used 800 hrs. Standard variable factory overhead rate x $6 Variance-unfavorable 4,800 Total factory overhead cost variance-unfavorable $2,100

The data related to Shunda Enterprises Inc.'s factory overhead cost for the production of 50,000 units of product are as follows: Actual: Variable factory overhead $263,300 Fixed factory overhead 188,800 Standard: 76,000 hrs. at $6 ($3.50 for variable factory overhead) 456,000 Productive capacity at 100% of normal was 75,200 hours, and the factory overhead cost budgeted at the level of 76,000 standard hours was $453,300. Based on these data, the chief cost accountant prepared the following variance analysis: Variable factory overhead controllable variance: Actual variable factory overhead cost incurred $263,300 Budgeted variable factory overhead for 76,000 hours (266,000) Variance-favorable $(2,700) Fixed factory overhead volume variance: Normal productive capacity at 100% 75,200 hrs. Standard for amount produced (76,000) Productive capacity not used 800 hrs. Standard variable factory overhead rate x $6 Variance-unfavorable 4,800 Total factory overhead cost variance-unfavorable $2,100

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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