Concept explainers
Concept Introduction:
Overhead expense comprises of two elements which are (i) Variable
The difference between the Actual Overheads and Standard Overheads can be of two reasons.
Reason 1 – Difference in volume of production
Reason 2 – Difference in rate of overheads
While the difference in rate is considered as controllable variance, the other is non controllable and it is called as Overhead Volume Variance.
Thus Overhead Cost Variance is sum of Overhead Controllable Variance and Overhead Volume Variance.
The formula for calculating Overhead Cost Variances are as follows:
Overhead Cost Variance (OCV) = Overhead Volume Variance (OVV) + Overhead Controllable/Price Variance (OPV)
Also, OCV = Standard Overhead applied to production – Actual Overhead cost
To determine: Actual the total overhead cost
Want to see the full answer?
Check out a sample textbook solutionChapter 23 Solutions
Fundamental Accounting Principles
- I want to this question answer general Accountingarrow_forwardWhat was it's charge for depreciation and amortization of this financial accounting question?arrow_forwardQuestion 1. Pearl Leasing Company agrees to lease equipment to Martinez Corporation on January 1, 2025. The following information relates to the lease agreement. 1. The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years. 2 The cost of the machinery is $541,000, and the fair value of the asset on January 1, 2025, is $760,000. 3. At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $45,000, Martinez estimates that the expected residual value at the end of the lease term will be $45,000. Martinez amortizes all of its leased equipment on a straight-line basis. 4. The lease agreement requires equal annual rental payments, beginning on January 1, 2025. 5. The collectibility of the lease payments is probable. 6. Pearl desires a 10% rate of return on its investments. Martinez's incremental borrowing rate is 11%, and the lessor's implicit rate is unknown. Annual rental payment is…arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education