Question

ComplexChem, Inc., produces chemicals for large biotech companies. It has the following data for manufacturing overhead costs during August 2017:

Variable    Fixed

Actual costs incurred $31,500 $13,000 Costs allocated to products 35,000 15,400 Flexible budget — 14,400 Actual input x budgeted rate 31,000 —

Requirements

​(If no variance exists leave the dollar value blank. Label the variance as favorable​ (F), unfavorable​ (U) or never a variance​ (N).)

	Variable	Fixed
(1)	Spending variance	$	$
(2)	Efficiency variance
(3)	Production-volume variance
(4)	Flexible-budget variance
(5)	Underallocated (overallocated)
	manufacturing overhead

Answer 1

Answer:-

Particulars	Variable	Fixed
1) Spending Variance	$500 U	$1400 U
2) Efficiency Variance	$4000 U	-
3) Production Volume Variance	-	$1000 F
4) Flexible Budget Variance	$3,500 U	$400 U
5) Under/over Allocated Manufacturing Overhead	$3500 Under	$400 Under

Variable Manufacturing Overhead :-

Actual Cost incurred = $31,500

Cost Allocated to Product = $35,000

Actual input * Budgeted Rate = $31,000

1) Spending variance = $31,500 - $31,000 = $500 U

2) Efficiency Variance = $31,000 - $35,000 = $4,000 U

3) Flexible Budget Varianace = Spending Variance + Efficiency Variance

= $500 U + $4,000 U

= $3,500 U

Fixed Manufacturing Overhead :-

Actual Cost Incurred = $13,000

Cost allocated to Products = $15,400

Flexible Budget = $14,400

1) Spending Variance = $13,000 - $14,400 = $1400 U

2) Production Volume Variance = $14,400 - $15,400 = $1000 F

3) Flexible Budget Variance = Sepnding Variance + Production Volume Variance

= $1,400 U + $1000 F

= $400 U

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