5th Edition

ISBN: 9780134128528

Author: Karen W. Braun, Wendy M. Tietz

Publisher: PEARSON

Concept explainers

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 …

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 t…

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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 (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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