Question

QUESTION 4

1. ABC Company uses a standard absorption costing system that allocates overhead on the basis of direct labor hours. Here is their Statement of Gross Margin:

   Statement of Gross Margin
   Standard Revenue	1,000,000
   Sales price variance	(30,000)
   Sales volume variance	60,000
   Net revenue	1,030,000
   CGS @ Standard	700,000
   Total direct labor variance	30,000
   Direct materials price variance	(50,000)
   Direct materials quantity variance	40,000
   Fixed overhead budget variance	50,000
   Fixed overhead volume variance	(100,000)
   Variable overhead spending variance	20,000
   Variable overhead efficiency variance	(80,000)
   Adjusted Cost of Goods Sold	610,000
   Gross Margin	420,000

   indicate whether the following statement is true or false.

   The firm has over-applied fixed overhead.

   ()  True

   () False

QUESTION 5

1. Note the change in numbers from the previous question.

   Jordan Company produces basketballs and uses a standard costing system. Budgeted fixed overhead was $288,000. Rent changed during the year, causing actual fixed overhead to be $264,000. Jordan Company applies overhead on the basis of DLH. They projected 1,181,000 basketballs would be produced during the year. They actually produced 1,221,000 basketballs. The standard is 1DLH per basketball. They actually used 1DLH per basketball. What is the fixed overhead budget variance?

   (Please indicate an favorable variance with a "f" and an unfavorable variance with a "u")

QUESTION 6

1. Note the change in numbers from the previous problem.

   Druid Company makes a single product and uses a standard costing system that applies overhead on the basis of direct labor hours. They recently used 2,000 labor hours to produce 400 units. Their static budget indicated expectations of 500 units, 2,000 DLH and $70,000 in variable overhead. Actual VOH totaled $40,000. What was the variable overhead efficiency variance?

   Please indicate favorable variances with an "f" and unfavorable variances with a "u"

   (Round to the nearest dollar at the end of your calculations)

Answer 1

Answer with working is given below

QN.4 TRUE The firm has over-applied overheads since the Fixed overhead volume and budget variance is Overall $50,000 favourable When the variance is favourable it is reduced from Standard COGS to arrive at actual COGS QN. 5 Fixed Overhead Budget Variance $24,000 Favourable Budgeted Fixed Overhead Actual Fixed Overhead Variance $288,000 $264,000 $24,000 Favourable QN. 6 Variable Overhead efficiency variance - $14,000 Unfavourable (Standard hours for actual production - Actual hours) * Variable overhead rate (1,600 - 2,000) *$35 -$14,000 Unfavourable 500 2,000 Standard hours for actual production Static budget output Direct Labor hours DL hour per unit Actual output 400 Standard hours 1,600 Standard variable overhead rate Budgeted Variable Overhead Actual hours Variable overhead hourly rate $70,000 2,000 $35