Answer:

According to the provided information, the actual raw materials are

.

The actual direct labor is

.

The actual variable overhead is

.

Therefore, the raw materials variance is

.

The direct labor variance is

.

The variable overhead variance is

.

The fixed overhead variance is

The flexible budget and performance report for August is as below:

Answer:

Variance is the difference between budgeted or standard cost and the actual amount spent/incurred. The same may be made for revenues.

There are various types of variances and are:

1. Variances of efficiency

2. Variances of price rates

3. Variances due to volume

a.

Price variance is the difference between the actual price paid for purchased materials and their standard cost.

The material price variance may also be calculated at the time of material withdrawal from stores. In this case, the stock accounts are maintained at actual cost, price variances being extracted at the time of material usage rather than of purchase. The latter method is not usually recommended because one of the advantages of a standard costing system is the valuation of all stock at standard costs.

Compute price variance for raw material purchased:

b.

Raw material usage variance measures efficiency in the use of material, by comparing standard material usage for actual production with actual material used, the difference is valued at standard cost. The direct material usage variance may be divided into mix and yield variances if several materials are mixed in standard proportions

Compute Raw material usage variance:

c.

Direct labor rate variance indicates the actual cost of any change from the standard labor rate of remuneration.

Compute labor rate variance:

d.

Direct labor efficiency variance standard labor cost of any change from the standard level of labor efficiency.

Compute direct labor efficiency variance:

e.

Variable overhead spending variance indicates the actual cost of any change from the standard rate per hour. Hours refer to either labor or machine hours depending on the recovery base chosen for variable production overhead.

Compute variable overhead spending variance:

f.

Variable overhead efficiency variance is that part of variable overhead variance which arises due to the difference between standard hours required for actual output and the actual hours worked. It can be computed by multiplying the difference of standard and actual hours by the standard variable overhead rate per hour. If standard hours exceed the actual hours worked, the variance will be favorable and vice versa.

Compute variable overhead efficiency variance:

Answer:

(a) Evaluation of president's mark:

In the president's remark it can be identified that misleading of arbitrarily allocated fixed expenses are ignored.

(b) Calculate the company's net income if division B is closed down:

The company's net income if division B is closed down is calculated by deducting the lost contribution margin of closed division and adding the division B direct fixed expenses that would be eliminated to the current net income of the company as shown below:

Hence, the company net income without Division B is $4,000.

(c) Policy statement:

The policy statement related to the allocated fixed expenses should include "Never arbitrarily allocate fixed expenses".

There is no answer for this question