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Chapter 23: Q16RQ (page 1305)
Question:How is the fixed overhead volume variance different from the other variances?
Answer
Thefixed overhead volume variance is different from other variances; first, it is not a flexible variance, and second, it is a volume variance
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In 75 words or fewer, explain what a cost variance is and describe its potential causes.
Question:Match the product cost variance with the manager most probably responsible. Some answers may be used more than once. Some answers may not be used.
Variance Manager
19. Variable overhead cost variance
20. Direct materials efficiency variance
21. Direct labor cost variance
22. Fixed overhead cost variance
23. Direct materials cost variance
a. Human resources
b. Purchasing
c. Production
Calculating flexible budget variances
Complete the flexible budget variance analysis by filling in the blanks in the partialflexible budget performance report for 9,000 travel locks for Grant, Inc.
GRANT, INC. | |||||
Flexible Budget Performance Report (partial) | |||||
For the Month Ended April 30, 2018 | |||||
| ActualResults | Flexible Budget Variance | Flexible Budget | |||
| Units | 9,000 | (a) | 9,000 | ||
Sales Revenue | \(126,000 | (b) | (c) | \)108,000 | |
Variable Costs | \(52,300 | (d) | (e) | \)50,300 | |
Contribution Margin | \(73,700 | (f) | (g) | \)57,700 | |
Fixed Costs | \(16,100 | (h) | (i) | \)14,900 | |
Operating Income | \(57,600 | (j) | (k) | \)42,800 | |
Marsh Company uses a standard cost system and reports the following information for 2018:
Standards:
3 yards of cloth per unit at \(1.05 per yard
2 direct labor hours per unit at \)10.50 per hour
Overhead allocated at \(5.00 per direct labor hour
Actual:
2,600 yards of cloth were purchased at \)1.10 per yard
Employees worked 1,800 hours and were paid \(10.00 per hour
Actual variable overhead was \)1,700
Actual fixed overhead was \(7,300
Direct materials cost variance \) 130 U
Direct materials efficiency variance 420 F
Direct labor cost variance 900 F
Direct labor efficiency variance 2,100 F
Variable overhead cost variance 1,500 U
Variable overhead efficiency variance 1,500 F
Fixed overhead cost variance 600 U
Fixed overhead volume variance 1,600 F
Marsh produced 1,000 units of finished product in 2018. Record the journal entries to record direct materials, direct labor, variable overhead, and fixed overhead, assuming all expenditures were on account and there were no beginning or ending balances in the inventory accounts (all materials purchased were used in production, and all goods produced were sold). Record the journal entries to record the transfer to Finished Goods Inventory and Cost of Goods Sold (omit the journal entry for Sales Revenue). Adjust the Manufacturing Overhead account
Question:Top managers of Marshall Industries predicted 2018 sales of 14,800 units of its product at a unit price of \(9.50. Actual sales for the year were 14,600 units at \)12.00 each. Variable costs were budgeted at \(2.00 per unit, and actual variable costs were \)2.10 per unit. Actual fixed costs of \(48,000 exceeded budgeted fixed costs by \)4,000.
Prepare Marshall鈥檚 flexible budget performance report. What variance contributed most to the year鈥檚 favorable results? What caused this variance?
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