Fixed Overhead Spending/ Budget Variance : It is the difference of actual and budgeted fixed overhead cost. Fixed Overhead Budget Variance = Actual Fixed Overhead - Budgeted Fixed Overhead Fixed Overhead Volume variance: It is the difference of the allocated and budgeted fixed overhead cost. Fixed Overhead Volume Variance = Allocated Fixed Overhead - Budgeted Fixed Overhead Note: The allocated fixed overhead is calculated with the help of following formula: Allocated fixed Overhead cost = Standard hours ×Predetermined fixed Overhead allocation rate To calculate: Fixed Overhead volume variance.

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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 9, Problem 6.2GAP

To determine

Concept introduction:

Fixed Overhead Spending/ Budget Variance:

It is the difference of actual and budgeted fixed overhead cost.

Fixed Overhead Budget Variance = Actual Fixed Overhead - Budgeted Fixed Overhead

Fixed Overhead Volume variance:

It is the difference of the allocated and budgeted fixed overhead cost.

Fixed Overhead Volume Variance = Allocated Fixed Overhead - Budgeted Fixed Overhead

Note: The allocated fixed overhead is calculated with the help of following formula:

Allocated fixed Overhead cost = Standard hours ×Predetermined fixed Overhead allocation rate

To calculate:

Fixed Overhead volume variance.

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Computing and journalizing standard cost variances McKnight manufactures coffee mugs that it sells to other companies for customizing with their own logos. McKnight prepares flexible budgets and uses a standard cost system to control manufacturing costs. The standard unit cost of a coffee mug is based on static budget volume of 59,800 coffee mugs per month: Direct Materials (0.2 lbs. @ $0.25 per Ib.) $ 0.05 Direct Labor (3 minutes @ $0.11 per minute) 0.33 Manufacturing Overhead: Variable (3 minutes @ $0.06 per minute) $ 0.18 Fixed (3 minutes @ $0.15 per minute) 0.45 0.63 Total Cost Per Coffee Mug $ 1.01 Actual cost and production information for July 2020 follow: а. Actual production and sales were 62,500 coffee mugs. b. Actual direct materials usage was 10,000 Ibs. at an actual cost of $0.17 per Ib. Actual direct labor usage of 198,000 minutes at a cost of $25,740. d. Actual overhead cost was $8,500 variable and $32,100 fixed. e. Selling and administrative costs were $110,000. C.

Deluxe, Inc. produced 1,000 units of the company's product in 2018. The standard quantity of direct materials was three yards of cloth per unit at a standard cost of $1.05 per yard. The accounting records showed that 2,600 yards of cloth were used and the company paid $1.10 per yard. Standard time was two direct labor hours per unit at a standard rate of $10.75 per direct labor hour. Employees worked 1,400 hours and were paid $10.25 per hour. Read the requirements. Requirement 1. What are the benefits of setting cost standards? Standard costing helps managers do the following: Requirement 2. Calculate the direct materials cost variance and the direct materials efficiency variance as well as the direct labor cost and efficiency variances. Begin with the cost variances. Select the required formulas, compute the cost variances for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable (U). (Abbreviations used: AC actual cost; AQ = actual…

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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 9, Problem 6.2GAP

To determine

Concept introduction:

Fixed Overhead Spending/ Budget Variance:

It is the difference of actual and budgeted fixed overhead cost.

Fixed Overhead Budget Variance = Actual Fixed Overhead - Budgeted Fixed Overhead

Fixed Overhead Volume variance:

It is the difference of the allocated and budgeted fixed overhead cost.

Fixed Overhead Volume Variance = Allocated Fixed Overhead - Budgeted Fixed Overhead

Note: The allocated fixed overhead is calculated with the help of following formula:

Allocated fixed Overhead cost = Standard hours ×Predetermined fixed Overhead allocation rate

To calculate:

Fixed Overhead volume variance.

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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 9, Problem 6.2GAP

To determine

Concept introduction:

Fixed Overhead Spending/ Budget Variance:

It is the difference of actual and budgeted fixed overhead cost.

Fixed Overhead Budget Variance = Actual Fixed Overhead - Budgeted Fixed Overhead

Fixed Overhead Volume variance:

It is the difference of the allocated and budgeted fixed overhead cost.

Fixed Overhead Volume Variance = Allocated Fixed Overhead - Budgeted Fixed Overhead

Note: The allocated fixed overhead is calculated with the help of following formula:

Allocated fixed Overhead cost = Standard hours ×Predetermined fixed Overhead allocation rate

To calculate:

Fixed Overhead volume variance.

Expert Solution & Answer

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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 9, Problem 6.2GAP

To determine