Spending Variance: Spending variance is the deviation of actual expenses from the budgeted expenses. Efficiency Variance: Efficiency variance is the distinction between actual quantity of input and estimated quantity of input purchased for a particular price. Production-Volume Variance: Production volume variance determines the amount of overhead employed to the quantity produced. It is the distinction between the actual quantity manufactured and estimated quantity that should have been manufactured multiplied by budgeted overhead rate. Price Variance: Price variance is the distinction between the estimated or budgeted price of the input material and actual price of the input material multiplied by actual volume of input. Budgeted fixed overhead rate: Budgeted fixed overhead rate is the sum total of estimated overhead cost divided by the total volume of budgeted cost allocation base. To compute: a. Direct materials efficiency variance, b. direct materials rice variance, c. Direct labor efficiency variance, d. Direct labor price variance, e. Total manufacturing overhead manufacturing variance, f. Fixed overhead flexible budget variance , g. Fixed overhead production-volume variance.

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Answer 1

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Definition Definition Measure used to estimate the difference between the budgeted and annual proportion for a specific accounting year. A favorable budget variance refers to positive variances or gains, while unfavorable or negative variances refer to a shortfall in the budget. A budget variance is indicative of the instances where the actual costs incurred are higher or lower than the estimated costs.

Chapter 8, Problem 8.42P

1.

To determine

Spending Variance:

Spending variance is the deviation of actual expenses from the budgeted expenses.

Efficiency Variance:

Efficiency variance is the distinction between actual quantity of input and estimated quantity of input purchased for a particular price.

Production-Volume Variance:

Production volume variance determines the amount of overhead employed to the quantity produced. It is the distinction between the actual quantity manufactured and estimated quantity that should have been manufactured multiplied by budgeted overhead rate.

Price Variance:

Price variance is the distinction between the estimated or budgeted price of the input material and actual price of the input material multiplied by actual volume of input.

Budgeted fixed overhead rate:

Budgeted fixed overhead rate is the sum total of estimated overhead cost divided by the total volume of budgeted cost allocation base.

To compute: a. Direct materials efficiency variance, b. direct materials rice variance, c. Direct labor efficiency variance, d. Direct labor price variance, e. Total manufacturing overhead manufacturing variance, f. Fixed overhead flexible budget variance, g. Fixed overhead production-volume variance.

2.

To determine

To prepare: Gross margin for K Company’s first year of operation

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Michael McDowell Co. establishes a $108 million liability at the end of 2025 for the estimated site-cleanup costs at two of its manufacturing facilities. All related closing costs will be paid and deducted on the tax return in 2026. Also, at the end of 2025, the company has $54 million of temporary differences due to excess depreciation for tax purposes, $7.56 million of which will reverse in 2026. The enacted tax rate for all years is 20%, and the company pays taxes of $34.56 million on $172.80 million of taxable income in 2025. McDowell expects to have taxable income in 2026. Assuming that the only deferred tax account at the beginning of 2025 was a deferred tax liability of $5,400,000, draft the income tax expense portion of the income statement for 2025, beginning with the line "Income before income taxes." (Hint: You must first compute (1) the amount of temporary difference underlying the beginning $5,400,000 deferred tax liability, then (2) the amount of temporary differences…

Answer 2

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Definition Definition Measure used to estimate the difference between the budgeted and annual proportion for a specific accounting year. A favorable budget variance refers to positive variances or gains, while unfavorable or negative variances refer to a shortfall in the budget. A budget variance is indicative of the instances where the actual costs incurred are higher or lower than the estimated costs.

Chapter 8, Problem 8.42P

1.

To determine

Spending Variance:

Spending variance is the deviation of actual expenses from the budgeted expenses.

Efficiency Variance:

Efficiency variance is the distinction between actual quantity of input and estimated quantity of input purchased for a particular price.

Production-Volume Variance:

Production volume variance determines the amount of overhead employed to the quantity produced. It is the distinction between the actual quantity manufactured and estimated quantity that should have been manufactured multiplied by budgeted overhead rate.

Price Variance:

Price variance is the distinction between the estimated or budgeted price of the input material and actual price of the input material multiplied by actual volume of input.

Budgeted fixed overhead rate:

Budgeted fixed overhead rate is the sum total of estimated overhead cost divided by the total volume of budgeted cost allocation base.

To compute: a. Direct materials efficiency variance, b. direct materials rice variance, c. Direct labor efficiency variance, d. Direct labor price variance, e. Total manufacturing overhead manufacturing variance, f. Fixed overhead flexible budget variance, g. Fixed overhead production-volume variance.

2.

To determine

To prepare: Gross margin for K Company’s first year of operation

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 3

Question

Definition Definition Measure used to estimate the difference between the budgeted and annual proportion for a specific accounting year. A favorable budget variance refers to positive variances or gains, while unfavorable or negative variances refer to a shortfall in the budget. A budget variance is indicative of the instances where the actual costs incurred are higher or lower than the estimated costs.

Chapter 8, Problem 8.42P

1.

To determine

Spending Variance:

Spending variance is the deviation of actual expenses from the budgeted expenses.

Efficiency Variance:

Efficiency variance is the distinction between actual quantity of input and estimated quantity of input purchased for a particular price.

Production-Volume Variance:

Production volume variance determines the amount of overhead employed to the quantity produced. It is the distinction between the actual quantity manufactured and estimated quantity that should have been manufactured multiplied by budgeted overhead rate.

Price Variance:

Price variance is the distinction between the estimated or budgeted price of the input material and actual price of the input material multiplied by actual volume of input.

Budgeted fixed overhead rate:

Budgeted fixed overhead rate is the sum total of estimated overhead cost divided by the total volume of budgeted cost allocation base.

To compute: a. Direct materials efficiency variance, b. direct materials rice variance, c. Direct labor efficiency variance, d. Direct labor price variance, e. Total manufacturing overhead manufacturing variance, f. Fixed overhead flexible budget variance, g. Fixed overhead production-volume variance.

2.

To determine

To prepare: Gross margin for K Company’s first year of operation

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Definition Definition Measure used to estimate the difference between the budgeted and annual proportion for a specific accounting year. A favorable budget variance refers to positive variances or gains, while unfavorable or negative variances refer to a shortfall in the budget. A budget variance is indicative of the instances where the actual costs incurred are higher or lower than the estimated costs.

Chapter 8, Problem 8.42P

1.

To determine