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

Actual overhead is $700,000,while budgeted overhead is $598,000.What is the fixed overhead static-budget variance if 250,000 units are produced and 225,000 are budgeted?

Effective planning of variable overhead costs means that a company performs those variable overhead costs that primarily add value

Randy's Production Company uses a single cost pool for fixed manufacturing overhead.The amount for May 2015 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?

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: -What is the fixed overhead rate variance?

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. 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 variable overhead efficiency variance?

Teri's Furniture uses variance analysis to evaluate manufacturing overhead in its' table factory.The information for the May overhead expenditures is as follows: Required: a.Calculate the variable manufacturing overhead rate and efficiency variances;and,the fixed manufacturing overhead rate and production-volume variances. b.Prepare all necessary journal entries to record the actual costs,allocated costs,and variances.Keep variable and fixed entries separate.

Non-financial performance measures

Different management levels in Bates Inc.require varying degrees of managerial accounting information.Because of the need to comply with the managers' requests,four different variances for manufacturing overhead are computed each month.The information for the September overhead expenditures is as follows: Required: a.Compute a 4-variance analysis for the plant controller. b.Compute a 3-variance analysis for the plant manager. c.Compute a 2-variance analysis for the corporate controller. d.Compute the flexible-budget variance for the manufacturing vice-president.

Answer the following question(s)using the information below. Lukehart Industries Inc.produces air purifiers in batches.To manufacture a batch of the purifiers Lukehart Inc.must setup the machines and assembly line tooling.Setup costs are batch-level costs because they are associated with batches rather than individual units of products.A separate Setup Department is responsible for setting up machines and tooling for different models of the air purifiers. Setup overhead costs consist of some costs that are variable and some costs that are fixed with respect to the number of setup hours.The following information pertains to June 2012: -Calculate the efficiency variance for variable setup overhead costs.

Jael Equipment uses a flexible budget for its indirect manufacturing costs.For 2015 the company anticipated that it would produce 18,000 units with 3,500 machine-hours and 7,200 employee days.The costs and cost drivers were to be as follows: During the year,the company processed 20,000 units;worked 7,500 employee days;and,had 4,000 machine hours.The actual costs for 2015 were: Required: a.Prepare the static-budget using the overhead items above and then compute the static-budget variances. b.Prepare the flexible-budget using the overhead items above and then compute the flexible-budget variances.

If Michelle Inc.uses a two-variance analysis format then what will be the reported variances?

If Ferg Company has a $12,000 unfavourable variable overhead efficiency variance,which of the following statements would be TRUE?

Assume that variable manufacturing overhead is allocated according to machine-hours.Aladdin Company expects to produce 400 cases of Product A using 400 machine-hours.Each machine hour is expected to take 10 KWH of electricity,which costs $6 per KWH.What is the maximum amount the company would be willing to pay for the new machine based solely on rate and efficiency variances if a new energy-efficient machine only used 8 KWH per machine-hour?

Capacity cost is

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 is the Michelle Inc.fixed manufacturing overhead rate variance?

Delivering value to the customer requires executing activities important to the value proposition.Many of the activities cannot be evaluated by financial measures of performance.List five non-financial measures of performance applicable to the hospitality industry.

An unfavourable production volume variance (a result of lower-than-budgeted output)should be expensed (to COGS)in the period it arises rather than be allocated to inventory.

Variable overhead rate variance is the difference between the actual amount of variable overhead incurred and the budgeted amount allowed for the actual quantity of the variable overhead allocation base used for the actual output units achieved.

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.