Question

Assume that the Test Corporationis manufacturing facility actually incurred $2.881,000 of manufacturing overhead for the year. Total fixed manufacturing overhead was budgeted at $3.070.000. Using a standard costing system, the company allocated $2.46.000 of feed manufacturing overhead to production Read memes Requirement 1. Calculate the total fixed manufacturing overhead variance. What does this tell managers? Identify the formule labels and calculate the total overhead variance (Enteral values as positive numbers. Label the variance as favorable (F) or unfavorable (U)) Totalfred manufacturing overhead variance What does the total and manufacturing overhead variance to managers? The variance managers that Test man facturing overhead by $ Requirement 2. Dele t ed overhead budget variance. What does this managers? Identify the form bel and calculate the feed overhead budget variance (Enteral values as positive numbers Label the variance as favorable For unfavorable()) Fixed overhead budget variance •

Answer 1

Given facts, company - Test Corporation Actually incurred Fixed overhead Budgeted Fixed overhead Abs&bed Fixed overhead & $2,981,000 $3,070,000 - 82,946,000. Neemarenonto- Total Fixed Overhead Computation - - Abgabed Less! fixed Actual oveshead fixed cuesheed - $2,981000 - d 2,946,000 - $35.000 (0) It tell about that, The variance corporation's actually linan Absribed fixed $35.000 tells managers that rest incurred more fixed overhead manufacturing overhead by

Requiremento Fixed Fixed overhand budget variance ako called overhead Expenditure varianei Fixed Actual Less: Overhead. fixed Overhead 5 $3,020,000 (-) $2,98 1,000 = $89.000 C E The variance tells, managon that Tests corporation incurres actual fixed overhead is less than Budgeted overhead by manufacturing over fixed overhead by $ 89,000 is company in better positione

Requirement : Fixed Overhead volume variance: = Absorbed Legs: Fixed Overhead .. Budgested Fixed Overhead = $2,946,000 - $3,0.19000 = $ 124,00o (o) This variance tells manges that Budgeted fived overhead camount is more than standaard fixed oveshead of actual production units by $ 124,000 Requirement : Double checks and a e Total - Fixed crashead vadicinco Fixed creshead Budged variance & Fixed Cuenhead volume variance 2 35,000 (u) = $89000 (A) +$124,000 (o) 2) 35000 (u) $35.000 (u)

* G V 8 N M double check is satished, sum of badgeted fixed overhead budget variance and fixed overhead volume variance is equal to total fixed crohead veriance.