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

For planning and control purposes,actual energy usage per machine hour compared with budgeted energy usage per machine hour,is a valid financial performance measure.

Brown Dental Equipment uses a flexible budget for its indirect manufacturing costs.For 2016 the company anticipated that it would produce 36,000 components with 7,000 machine hours and 14,400 employee days.The costs and cost drivers were to be as follows: During the year the company processed 40,000 units,worked 15,000 employee days,and had 8,000 machine hours.The actual costs for 2016 were: Required: a.Prepare an overhead static budget for 2016 with variances. b.Prepare an overhead flexible budget for 2016 with variances.

What is the variable manufacturing overhead flexible-budget variance?

The chapter shows that variance analysis of overhead costs can be presented in 4-,3-,2-,and 1-variance analysis.Explain what each of the variances presented under each method shows about overhead costs.

The Saskatchewan 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 fixed manufacturing overhead incurred and allocated to production. 2.Prepare the journal entry to close the fixed overhead variance accounts assuming that the fluctuation in denominator level is considered to be normal.

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?

A favourable production-volume variance arises when manufacturing capacity planned for is not used.

Heather's Pillow Company manufactures pillows.The current year operating budget is based on production of 20,000 pillows with 0.5 machine-hour allowed per pillow.Variable manufacturing overhead is anticipated to be $220,000. Actual production was 18,000 pillows using 9,500 machine-hours.Actual variable costs were $20 per machine-hour. Required: Calculate the variable overhead rate and efficiency variances.