Question

Doyle Industries produces high-end Rules for professional musicians across the globe. Actual faxed manufacturing overhead for the year was $1,260,000, while the budgeted fixed manufacturing overhead was $1.265.000. Using a standard costing system, the company allocated $1,210,000 of overhead to production Read the grements Requirement 1. Calculate the total fed overhead variance. What does this tell managers? Begin by determining the formula for the fired overhead budget variance, then compute the variance. (Abbreviation used: Std. - Standard. Enter the variance as a positive number. Labelth variance as favorable For unfavorable (U).) Fixed overhead variance What does the total overhead variance tel managers? The variantes managers that Doyle manufacturing overhead by this amount Requirement 2. Demine the face overhead budget variance. What does this managers? Identify the form bel and call the feed overhead budget variance Enteral values as positive numbers. Label the variance as favorable For unfavorable (U).) Fored overhead

Answer 1

Requirement 1 Actual fixed Overhead Cost Std. Fixed Overhead Cost Allocated to Production Fixed Overhead Variance 1260000 - 1210000 = 50000 (U) What does the overhead variance tell managers? The variance tells managers that Doyle underallocated manufacturing overhead by this amount. Requirement 2 Actual fixed Overhead Cost Budgeted Fixed Overhead for actual output Fixed Overhead Budget Variance 1260000 - 1265000 = 5000 (F) What does the overhead variance tell managers? The variance tells managers that Doyle actually incurred less for manufacturing overhead than they would have expected for the actual volume produced during the year.

Requirement 3 Std. Fixed Overhead Cost Allocated to Production Budgeted Fixed Overhead for actual output Fixed Overhead production volume Variance 1210000 - 1265000 = 55000 (U)