Explanation Variable factory overhead controllable variances: The difference between the actual variable overhead costs and the standard overhead for actual production is known as the variable factory overhead controllable variances. The variable factory overhead controllable variance is computed as follows: Variable factory overhead controllable variance } = ( Actual variable factory overhead − Standard variable factory overhead ) Fixed factory overhead volume variances: Factory overhead volume variances refers to the difference between the budgeted fixed overheads at 100% of normal capacity, and the standard fixed overheads for the actual units produced. The factory overhead volume variances can be calculated as follows: Fixed factory overhead volume variance } = ( Standard hours for 100% of normal capacity − Standard hours for actual units produced ) × ( Fixed factory overhead rate ) The errors in the factory overhead cost variance analysis are as follows: • In the fixed factory overhead volume variance, instead of deducting an amount of $3.80 (4) as the standard hours for actual units produced, an amount of $7.30 was deducted from the standard hours for 100% of normal capacity by the chief cost accountant. • This error resulted in the unfavorable fixed factory overhead volume variance of $14,600, instead of the correct favorable fixed factory overhead volume variance of $(7,600). • This also resulted in an unfavorable total factory overhead cost variance of $10,600, instead of the correct favorable total factory overhead cost variance of $(11,600) (5) . Working note (1): Determine the correct variable factory overhead controllable variance . Variable factory overhead controllable variance } = ( Actual variable factory overhead − Standard variable factory overhead (2) ) = $458,000 − $462,000 =$(4,000) Working note (2): Determine the standard variable factory overhead. Standard variable factory overhead } = [ Standard hours at actual production × Variable factory overhead rate ] = $132,000 × $3

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ISBN: 9781337955423

Author: WARREN, JONES

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Chapter 23, Problem 17E

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Identify the errors in the factory overhead cost variance analysis.

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Chapter 23 Solutions

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Ch. 23 - What are the basic objectives in the use of...Ch. 23 - What is meant by reporting by the principle of...Ch. 23 - Prob. 3DQ Ch. 23 - Prob. 4DQ Ch. 23 - A. What are the two variances between the actual...Ch. 23 - A new assistant controller recently was heard to...Ch. 23 - Would the use of standards be appropriate in a...Ch. 23 - Prob. 8DQ Ch. 23 - At the end of the period, the factory overhead...Ch. 23 - If variances are recorded in the accounts at the...

Ch. 23 - Direct materials variances Bellingham Company...Ch. 23 - Direct labor variances Bellingham Company produces...Ch. 23 - Factory overhead controllable variance Bellingham...Ch. 23 - Factory overhead volume variance Bellingham...Ch. 23 - Standard cost journal entries Bellingham Company...Ch. 23 - Income statement with variances Prepare an income...Ch. 23 - Crazy Delicious Inc. produces chocolate bars. The...Ch. 23 - Atlas Furniture Company manufactures designer home...Ch. 23 - Salisbury Bottle Company manufactures plastic...Ch. 23 - The following data relate to the direct materials...Ch. 23 - De Soto Inc. produces tablet computers. The...Ch. 23 - Standard direct materials cost per unit from...Ch. 23 - H.J. Heinz Company uses standards to control its...Ch. 23 - Direct labor variances The following data relate...Ch. 23 - Glacier Bicycle Company manufactures commuter...Ch. 23 - Ada Clothes Company produced 40,000 units during...Ch. 23 - Mexicali On the Go Inc. owns and operates food...Ch. 23 - Direct materials and direct labor variances At the...Ch. 23 - Flexible overhead budget Leno Manufacturing...Ch. 23 - Flexible overhead budget Wiki Wiki Company has...Ch. 23 - Factory overhead cost variances The following data...Ch. 23 - Thomas Textiles Corporation began November with a...Ch. 23 - Prob. 17E Ch. 23 - Factory overhead cost variance report Tannin...Ch. 23 - Recording standards in accounts Cioffi...Ch. 23 - Prob. 20E Ch. 23 - Income statement indicating standard cost...Ch. 23 - Rockport Industries Inc. gathered the following...Ch. 23 - Dickinsen Company gathered the following data for...Ch. 23 - Rosenberry Company computed the following revenue...Ch. 23 - Lowell Manufacturing Inc. has a normal selling...Ch. 23 - Shasta Fixture Company manufactures faucets in a...Ch. 23 - Flexible budgeting and variance analysis I Love My...Ch. 23 - Direct materials, direct labor, and factory...Ch. 23 - Factory overhead cost variance report Tiger...Ch. 23 - CodeHead Software Inc. does software development....Ch. 23 - Direct materials and direct labor variance...Ch. 23 - Flexible budgeting and variance analysis Im Really...Ch. 23 - Direct materials, direct labor, and factory...Ch. 23 - Factory overhead cost variance report Feeling...Ch. 23 - Prob. 5PB Ch. 23 - Prob. 1COMP Ch. 23 - Advent Software uses standards to manage the cost...Ch. 23 - Admissions time variance Valley Hospital began...Ch. 23 - United States Postal Service: Mail sorting time...Ch. 23 - Direct labor time variance Maywood City Police...Ch. 23 - Ethics in action Dash Riprock is a cost analyst...Ch. 23 - Variance interpretation Vanadium Audio Inc. is a...Ch. 23 - MinnOil performs oil changes and other minor...Ch. 23 - Prob. 2CMA Ch. 23 - Frisco Company recently purchased 108,000 units of...Ch. 23 - JoyT Company manufactures Maxi Dolls for sale in...

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