Principles of Auditing & Other Assurance Services (Irwin Accounting)
Principles of Auditing & Other Assurance Services (Irwin Accounting)
20th Edition
ISBN: 9780077729141
Author: Ray Whittington, Kurt Pany
Publisher: McGraw-Hill Education
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Chapter 18, Problem 21RQ
To determine

Provide an example for the situation in which the internal control audit might affect the performance of substantive procedures for the financial statement audit.

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Hudini Company's variable overhead is applied on the basis of direct labor hours. The standard cost card specifies 4 direct labor hours per unit of its product. The standard variable overhead rate is $6 per direct labor hour. Last quarter, Hudini actually produced 12,000 units of product. The company's accounting records show its variable overhead efficiency variance variance was $6,500 Unfavorable and variable overhead rate variance was $10,000 Favorable. What was Hudini's actual variable overhead cost last quarter?
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