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Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins
Edition 5ISBN: 0073526940Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins
Edition 5ISBN: 0073526940Fixed Overhead Variances (Continuation of Exercise 15-31) For March 2010 the Platter Valley factory of Bybee Industries budgeted $90,000 of fixed overhead. Its practical capacity is 2,500 direct labor hours per month (to manufacture 5,000 pairs of boots).
The factory spent 2,700 direct labor hours in March 2010 to manufacture 4,800 pairs of boots. The actual fixed overhead incurred for the month was $92,000.
Required
1. Compute the spending (budget) variance and the production-volume variance for fixed overhead for March.
2. Compute the fixed overhead flexible-budget variance.
3. Provide appropriate journal entries to record the fixed overhead spending and fixed overhead production-volume variances for March.
4. Comment on the factory’s results in March 2010 with regard to fixed overhead costs.
Verified
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Fixed overhead variance is the difference between overhead budgeted and actual overhead at the end. Fixed overhead variance includes following variances.
Spending (budget) variance
Production volume variance
Flexible budget variance
Step 2 of 7
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Step 7 of 7
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