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Concept explainers
Flexible Budget:
A flexible budget is prepared for more than one level of production and it is flexible in nature. Flexible budget can vary according to the actual level of production. It eliminates the volume variance between the budgeted values and actual result of production.
Material Price Variance:
At the actual quantity, the difference between the actual
Material Quantity Variance:
The material quantity variance measures the efficiency of a production in terms of material utilization. It is computed by determining the difference between the standard quantity to used and actual quantity of material used in the production at the standard rate.
Labor Rate Variance:
At the actual direct labor hours, the variance between the actual direct labor cost based on actual rate incurred and the budgeted direct labor cost based on standard rate is called direct labor cost variance.
Direct Labor Efficiency Variance:
Direct labor efficiency variance measures the efficiency in utilization of direct labor costs by determining the difference between the actual labor hours and the direct labor hours allowed at the standard rate.
To determine:
1. Determine the cost per unit of each variable
2. Preparing flexible budgets showing the amounts of each variable and fixed cost at the 65%, 75% and 85% capacity levels.
3. Computation of direct materials cost variance, showing price and quantity variances.
4. Computation of direct labor cost variance, showing rate and efficiency variances.
5. Preparation of overhead variance report that shows the variances for individual items of overhead.
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Chapter 23 Solutions
Fundamental Accounting Principles -Hardcover
- Acorn Construction (calendar-year-end C corporation) has had rapid expansion during the last half of the current year due to the housing market's recovery. The company has record income and would like to maximize its cost recovery deduction for the current year. (Use MACRS Table 1, Table 2, Table 3, Table 4, and Table 5.) Note: Round your answer to the nearest whole dollar amount. Acorn provided you with the following information: Asset Placed in Service Basis New equipment and tools August 20 $ 3,800,000 Used light-duty trucks October 17 2,000,000 Used machinery November 6 1,525,000 Total $ 7,325,000 The used assets had been contributed to the business by its owner in a tax-deferred transaction two years ago. a. What is Acorn's maximum cost recovery deduction in the current year?arrow_forwardGeneral accountingarrow_forwardQuick answer of this accounting questionsarrow_forward
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