The following information in respect of a production process is available for the month of April 2023. Budgeted Actual Output Units 120000 130000 Hours 120000 132000 Fixed Overheads 180000 200000 Variable Overheads 240000 272000 Working Days 100 104 Compute the relevant overheads variances.

The following information in respect of a production process is available for the month of April 2023. Budgeted Actual Output Units 120000 130000 Hours 120000 132000 Fixed Overheads 180000 200000 Variable Overheads 240000 272000 Working Days 100 104 Compute the relevant overheads variances.

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Description: The following information in respect of a production process is available for the month of April2023. Budgeted Actual Output Units 120000 130000 Hours 120000 132000 Fixed Overheads180000 200000 Variable Overheads 240000 272000 Working Days 100 104 C

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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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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Question

The following information in respect of a production process is available for the month of April
2023. Budgeted Actual Output Units 120000 130000 Hours 120000 132000 Fixed Overheads
180000 200000 Variable Overheads 240000 272000 Working Days 100 104 Compute the
relevant overheads variances.

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Step 1: Define overhead variances.

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Step 2: Compute the Variable overhead spending variance:

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Step 3: Determine the Variable overhead efficiency variance:

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Step 4: Calculate the Fixed overhead spending variance:

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Step 5: Determine the Fixed overhead volume variance:

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