Variable overhead cost variance: Variable overhead cost variance can be defined as difference in the standard variable overheads and actual variable overheads. Variable overhead cost variance is calculated as under – V a r i a b l e o v e r h e a d c o s t v a r i a n c e = A c t u a l V a r i a b l e O v e r h e a d − ( S t a n d a r d C o s t – A c t u a l Q u a n t i t y ) Variable overhead efficiency variance: Variable overhead efficiency variance can be defined as difference between the standard hours or standard basis of use and actual hours or actual basis of use Variable overhead efficiency variance is calculated as under – V a r i a b l e o v e r h e a d e f f i c i e n c y v a r i a n c e = ( S t a n d a r d Q u a n t i t y – A c t u a l Q u a n t i t y ) X S t a n d a r d R a t e Fixed overhead cost variance: Fixed overhead cost variance can be defined as difference in the standard fixed overheads and actual fixed overheads. Fixed overhead cost variance is calculated as under – F i x e d o v e r h e a d c o s t v a r i a n c e = A c t u a l F i x e d O v e r h e a d − B u d g e t e d F i x e d O v e r h e a d Fixed overhead volume variance: Fixed overhead volume variance can be defined as difference between fixed overhead for standard output and fixed overhead for actual output. Fixed overhead volume variance is calculated as under – F i x e d o v e r h e a d v o l u m e v a r i a n c e = B u d g e t e d F i x e d O v e r h e a d – A l l o c a t e d F i x e d O v e r h e a d To compute: 1. Variable Overhead cost variance 2. Variable overhead efficiency variance 3. Fixed Overhead Cost variance 4. Fixed overhead volume variance

Question

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Answer 1

Question

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

Chapter 23, Problem S23.10SE

To determine

Concept Introduction:

Variable overhead cost variance:

Variable overhead cost variance can be defined as difference in the standard variable overheads and actual variable overheads.

Variable overhead cost variance is calculated as under –

$V a r i a b l e o v e r h e a d c o s t v a r i a n c e = A c t u a l V a r i a b l e O v e r h e a d - (S t a n d a r d C o s t - A c t u a l Q u a n t i t y)$

Variable overhead efficiency variance:

Variable overhead efficiency variance can be defined as difference between the standard hours or standard basis of use and actual hours or actual basis of use

Variable overhead efficiency variance is calculated as under –

$V a r i a b l e o v e r h e a d e f f i c i e n c y v a r i a n c e = (S t a n d a r d Q u a n t i t y - A c t u a l Q u a n t i t y) X S t a n d a r d R a t e$

Fixed overhead cost variance:

Fixed overhead cost variance can be defined as difference in the standard fixed overheads and actual fixed overheads.

Fixed overhead cost variance is calculated as under –

$F i x e d o v e r h e a d c o s t v a r i a n c e = A c t u a l F i x e d O v e r h e a d - B u d g e t e d F i x e d O v e r h e a d$

Fixed overhead volume variance:

Fixed overhead volume variance can be defined as difference between fixed overhead for standard output and fixed overhead for actual output.

Fixed overhead volume variance is calculated as under –

$F i x e d o v e r h e a d v o l u m e v a r i a n c e = B u d g e t e d F i x e d O v e r h e a d - A l l o c a t e d F i x e d O v e r h e a d$

To compute:

1. Variable Overhead cost variance

2. Variable overhead efficiency variance

3. Fixed Overhead Cost variance

4. Fixed overhead volume variance

To determine

Requirement 2

To explain:

Why the variances are favourable or unfavourable

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General Accounting problem

A company reported the following information for its most recent year of operation: purchases, $120,000; beginning inventory, $25,000; and cost of goods sold, $130,000. How much was the company's ending inventory?help

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Answer 2

Question

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

Chapter 23, Problem S23.10SE

To determine

Concept Introduction:

Variable overhead cost variance:

Variable overhead cost variance can be defined as difference in the standard variable overheads and actual variable overheads.

Variable overhead cost variance is calculated as under –

$V a r i a b l e o v e r h e a d c o s t v a r i a n c e = A c t u a l V a r i a b l e O v e r h e a d - (S t a n d a r d C o s t - A c t u a l Q u a n t i t y)$

Variable overhead efficiency variance:

Variable overhead efficiency variance can be defined as difference between the standard hours or standard basis of use and actual hours or actual basis of use

Variable overhead efficiency variance is calculated as under –

$V a r i a b l e o v e r h e a d e f f i c i e n c y v a r i a n c e = (S t a n d a r d Q u a n t i t y - A c t u a l Q u a n t i t y) X S t a n d a r d R a t e$

Fixed overhead cost variance:

Fixed overhead cost variance can be defined as difference in the standard fixed overheads and actual fixed overheads.

Fixed overhead cost variance is calculated as under –

$F i x e d o v e r h e a d c o s t v a r i a n c e = A c t u a l F i x e d O v e r h e a d - B u d g e t e d F i x e d O v e r h e a d$

Fixed overhead volume variance:

Fixed overhead volume variance can be defined as difference between fixed overhead for standard output and fixed overhead for actual output.

Fixed overhead volume variance is calculated as under –

$F i x e d o v e r h e a d v o l u m e v a r i a n c e = B u d g e t e d F i x e d O v e r h e a d - A l l o c a t e d F i x e d O v e r h e a d$

To compute:

1. Variable Overhead cost variance

2. Variable overhead efficiency variance

3. Fixed Overhead Cost variance

4. Fixed overhead volume variance

To determine

Requirement 2

To explain:

Why the variances are favourable or unfavourable

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

Chapter 23, Problem S23.10SE

To determine

Concept Introduction:

Variable overhead cost variance:

Variable overhead cost variance can be defined as difference in the standard variable overheads and actual variable overheads.

Variable overhead cost variance is calculated as under –

$V a r i a b l e o v e r h e a d c o s t v a r i a n c e = A c t u a l V a r i a b l e O v e r h e a d - (S t a n d a r d C o s t - A c t u a l Q u a n t i t y)$

Variable overhead efficiency variance:

Variable overhead efficiency variance can be defined as difference between the standard hours or standard basis of use and actual hours or actual basis of use

Variable overhead efficiency variance is calculated as under –

$V a r i a b l e o v e r h e a d e f f i c i e n c y v a r i a n c e = (S t a n d a r d Q u a n t i t y - A c t u a l Q u a n t i t y) X S t a n d a r d R a t e$

Fixed overhead cost variance:

Fixed overhead cost variance can be defined as difference in the standard fixed overheads and actual fixed overheads.

Fixed overhead cost variance is calculated as under –

$F i x e d o v e r h e a d c o s t v a r i a n c e = A c t u a l F i x e d O v e r h e a d - B u d g e t e d F i x e d O v e r h e a d$

Fixed overhead volume variance:

Fixed overhead volume variance can be defined as difference between fixed overhead for standard output and fixed overhead for actual output.

Fixed overhead volume variance is calculated as under –

$F i x e d o v e r h e a d v o l u m e v a r i a n c e = B u d g e t e d F i x e d O v e r h e a d - A l l o c a t e d F i x e d O v e r h e a d$

To compute:

1. Variable Overhead cost variance

2. Variable overhead efficiency variance

3. Fixed Overhead Cost variance

4. Fixed overhead volume variance

To determine

Requirement 2

To explain:

Why the variances are favourable or unfavourable

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

Chapter 23, Problem S23.10SE

To determine