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Uno (100.000 x 2 Dos (20,000 X Tres (90, 000 x Chapter 8 Standard Costing: A Functional-Based Control Approach 426 Exere Exercise 8.15 Overhead Variances, Four-Variance Analysis Oerstman, Inc., uses a standard costing system and develops its overhead rates from the annual budget. The budget is based on an expected annual output of 120,000 units requiring 480,000 direct labor hours. (Practical capacity is 500,000 hours.) Annual budgeted overhead costs total $787,200, of which $556,800 is fixed overhead. A total of 119,400 units using 478,000 Refe OBJECTIVE 4 on N pou direct labor hours were produced during the year. Actual variable overhead costs for the ve were $230,600, and actual fixed overhead costs were $556,250. Re year 1. 2. Required: 1. Compute the fixed overhead spending and volume variances. How would you interpret the spending variance? Discuss the possible interpretations of the volume variance. Which is most appropriate for this example? 2. Compute the variable overhead spending and efficiency variances. How is the variable over- head spending variance like the price variances of direct labor and direct materials? How is it different? How is the variable overhead efficiency variance related to the direct labor effi- ciency variance? OBJECTIVE 4 Exercise 8.16 Overhead Variances, Two- And Three-Variance Analyses Refer to the data in Exercise 8.15. Required: 1. Compute overhead variances using a two-variance analysis. 2. Compute overhead variances using a three-variance analysis. 3. Illustrate how the two- and three-variance analyses are related to the four-variance analysis,

Uno (100.000 x 2 Dos (20,000 X Tres (90, 000 x Chapter 8 Standard Costing: A Functional-Based Control Approach 426 Exere Exercise 8.15 Overhead Variances, Four-Variance Analysis Oerstman, Inc., uses a standard costing system and develops its overhead rates from the annual budget. The budget is based on an expected annual output of 120,000 units requiring 480,000 direct labor hours. (Practical capacity is 500,000 hours.) Annual budgeted overhead costs total $787,200, of which $556,800 is fixed overhead. A total of 119,400 units using 478,000 Refe OBJECTIVE 4 on N pou direct labor hours were produced during the year. Actual variable overhead costs for the ve were $230,600, and actual fixed overhead costs were $556,250. Re year 1. 2. Required: 1. Compute the fixed overhead spending and volume variances. How would you interpret the spending variance? Discuss the possible interpretations of the volume variance. Which is most appropriate for this example? 2. Compute the variable overhead spending and efficiency variances. How is the variable over- head spending variance like the price variances of direct labor and direct materials? How is it different? How is the variable overhead efficiency variance related to the direct labor effi- ciency variance? OBJECTIVE 4 Exercise 8.16 Overhead Variances, Two- And Three-Variance Analyses Refer to the data in Exercise 8.15. Required: 1. Compute overhead variances using a two-variance analysis. 2. Compute overhead variances using a three-variance analysis. 3. Illustrate how the two- and three-variance analyses are related to the four-variance analysis,

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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Uno (100.000 x 2 Dos (20,000 X Tres (90, 000 x Chapter 8 Standard Costing: A Functional-Based Control Approach 426 Exere Exercise 8.15 Overhead Variances, Four-Variance Analysis Oerstman, Inc., uses a standard costing system and develops its overhead rates from the annual budget. The budget is based on an expected annual output of 120,000 units requiring 480,000 direct labor hours. (Practical capacity is 500,000 hours.) Annual budgeted overhead costs total $787,200, of which $556,800 is fixed overhead. A total of 119,400 units using 478,000 Refe OBJECTIVE 4 on N pou direct labor hours were produced during the year. Actual variable overhead costs for the ve were $230,600, and actual fixed overhead costs were $556,250. Re year 1. 2. Required: 1. Compute the fixed overhead spending and volume variances. How would you interpret the spending variance? Discuss the possible interpretations of the volume variance. Which is most appropriate for this example? 2. Compute the variable overhead spending and efficiency variances. How is the variable over- head spending variance like the price variances of direct labor and direct materials? How is it different? How is the variable overhead efficiency variance related to the direct labor effi- ciency variance? OBJECTIVE 4 Exercise 8.16 Overhead Variances, Two- And Three-Variance Analyses Refer to the data in Exercise 8.15. Required: 1. Compute overhead variances using a two-variance analysis. 2. Compute overhead variances using a three-variance analysis. 3. Illustrate how the two- and three-variance analyses are related to the four-variance analysis,
Transcribed Image Text:Uno (100.000 x 2 Dos (20,000 X Tres (90, 000 x Chapter 8 Standard Costing: A Functional-Based Control Approach 426 Exere Exercise 8.15 Overhead Variances, Four-Variance Analysis Oerstman, Inc., uses a standard costing system and develops its overhead rates from the annual budget. The budget is based on an expected annual output of 120,000 units requiring 480,000 direct labor hours. (Practical capacity is 500,000 hours.) Annual budgeted overhead costs total $787,200, of which $556,800 is fixed overhead. A total of 119,400 units using 478,000 Refe OBJECTIVE 4 on N pou direct labor hours were produced during the year. Actual variable overhead costs for the ve were $230,600, and actual fixed overhead costs were $556,250. Re year 1. 2. Required: 1. Compute the fixed overhead spending and volume variances. How would you interpret the spending variance? Discuss the possible interpretations of the volume variance. Which is most appropriate for this example? 2. Compute the variable overhead spending and efficiency variances. How is the variable over- head spending variance like the price variances of direct labor and direct materials? How is it different? How is the variable overhead efficiency variance related to the direct labor effi- ciency variance? OBJECTIVE 4 Exercise 8.16 Overhead Variances, Two- And Three-Variance Analyses Refer to the data in Exercise 8.15. Required: 1. Compute overhead variances using a two-variance analysis. 2. Compute overhead variances using a three-variance analysis. 3. Illustrate how the two- and three-variance analyses are related to the four-variance analysis,
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