Managerial Accounting, Student Value Edition (5th Edition)

5th Edition

ISBN: 9780134067179

Author: Karen W. Braun, Wendy M. Tietz

Publisher: PEARSON

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Textbook Question

Chapter 11, Problem 11.10SE

Calculate and interpret fixed overhead variances (Learning Objective 6)

Calvin Industries produces high-end flutes for professional musicians across the globe. Actual fixed manufacturing overhead for the year was $1,250,000, while the budgeted fixed manufacturing overhead was $1,270,000. Using a standard costing system, the company allocated $1,200,000 of overhead to production.

Requirements

1. Calculate the total fixed overhead variance. What does this tell managers?
2. Determine the fixed overhead budget variance. What does this tell managers?
3. Determine the fixed overhead volume variance. What does this tell managers?

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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Chapter 11, Problem 11.9SE

Chapter 11, Problem 11.11SE

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Chapter 11 Solutions

Managerial Accounting, Student Value Edition (5th Edition)

Ch. 11 - (Learning Objective 1) Which of the following is...Ch. 11 - (Learning Objective 2) The direct material price...Ch. 11 - Prob. 3QC Ch. 11 - Prob. 4QC Ch. 11 - Prob. 5QC Ch. 11 - (Learning Objective 4) Which of the following is...Ch. 11 - Prob. 7QC Ch. 11 - (Learning Objective 6) Which of the following is...Ch. 11 - Prob. 9QC Ch. 11 - (Learning Objective 7Appendix) Which of the...

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Solution Summary: The author explains fixed overhead budget variance, which measures the difference between actual and budgeted overhead costs, and tells managers whether the company spent more or less than anticipated.

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Chapter 11 Solutions