Exam 8: Flexible Budgets, Variances, and Management Control: II

All-Green Company has traditionally used only financial accounting for its decision making purposes.The president recently attended a seminar for small-business executives where the importance of managerial accounting was stressed as a way to improve operating decisions.The president was very interested in the use of managerial accounting as a way of planning the company's manufacturing overhead.It seems that the managers have always been at odds over how to best control the overhead accounts.Required: Explain how the planning of variable and fixed manufacturing overhead can improve the company's decision making process.

Randy's Production Company uses a single cost pool for fixed manufacturing overhead.The amount for May 2018 was budgeted at $250,000; however, the actual amount was $350,000.Actual production for May was 12,500 units, and actual machine hours were 10,000.Budgeted production included 17,750 units and 12,375 machine hours.What is the budgeted fixed overhead rate per input unit?

The Ontario division of a Canadian farm machinery company uses a standard cost system for its machine-based production of grain drying equipment.Data regarding production for April are as follows: Required: 1.Prepare the necessary journal entries to account for the variable manufacturing overhead incurred and allocated to production.2.Prepare the journal entry to close the variable overhead variance accounts under the assumption that the amount is immaterial.

Use the information below to answer the following question(s).Regal Company uses a single cost pool for fixed manufacturing overhead.The amount for June 2019 was budgeted at $500,000; however, the actual amount was $700,000.Actual production for June was 12,500 units, and actual machine hours were 10,000.Budgeted production included 17,750 units and 12,375 machine hours. -What is Regal Company's budgeted fixed overhead rate per output unit?

A favourable production volume variance, if it is the result of an unusual fluctuation in production output, should be credited to COGS in the period that it arises.

The (production)denominator level is the quantity of the allocation base used to allocate fixed overhead costs to a cost object in developing a budgeted fixed overhead rate.

An unfavourable fixed setup overhead rate variance could be due to higher lease costs of new setup equipment or higher salaries paid to engineers and supervisors.

Kelly's Pillow Company manufactures pillows.The current year operating budget is based on production of 40,000 pillows with 0.5 machine-hour allowed per pillow.Variable manufacturing overhead is anticipated to be $440,000.Actual production was 36,000 pillows using 19,000 machine-hours.Actual variable costs were $20 per machine-hour.Required: Calculate the variable overhead rate and efficiency variances.

Fixed Manufacturing Overhead Variances that are not material should only be written off to Cost of Goods Sold.

Answer the following question(s)using the information below.Kellar Corporation manufactured 1,500 chairs during June.The following variable overhead data pertain to June: -What is the variable overhead flexible-budget variance?

Explain the meaning of a favourable production-volume variance.

Using a standard costing system makes it possible to use a simple recording system.

Use the information below to answer the following question(s).Regal Company uses a single cost pool for fixed manufacturing overhead.The amount for June 2019 was budgeted at $500,000; however, the actual amount was $700,000.Actual production for June was 12,500 units, and actual machine hours were 10,000.Budgeted production included 17,750 units and 12,375 machine hours. -What is Regal Company's budgeted fixed overhead rate per machine hour?

Answer the following question(s)using the information below.Willis Corporation manufactures industrial-sized gas furnaces and uses budgeted machine-hours to allocate variable manufacturing overhead.The following information pertains to the company's manufacturing overhead data: -What is the flexible-budget variance for variable manufacturing overhead?

Which option(s)would be consistent with the proration approach for end-of-period adjustments when the underallocated or overallocated variable overhead costs are significant?

There is causal relationship between the variable overhead allocation base and the variable overhead cost pool.

Use the information below to answer the following question(s).Michelle Inc.uses a level 4-variance analysis of its manufacturing overhead costs, and has the following results for April.A.Budgeted direct labour-hours per unit is used to allocate variable manufacturing overhead.Fixed overhead is allocated on a per unit basis. b.Budgeted amounts for April are: C.Actual amounts for April are: -What are the fixed manufacturing overhead efficiency and production-volume variances, respectively?

Use the information below to answer the following question(s).Moeller Electric manufactures light fixtures.The following information pertains to the company's manufacturing overhead data. -What is the variable manufacturing overhead flexible-budget variance?

The variable overhead efficiency variance can be interpreted the same way as the efficiency variance for direct-cost items.

Answer the following question(s)using the information below.Rutch Corporation manufactured 54,000 door jambs during September.The fixed-overhead cost allocation rate is $50.00 per machine-hour.The following fixed overhead data pertain to September: -A company had the following information pertaining to two different cases: The total fixed overhead variance in Case Y was