Illustration of overhead variance analysis, Cost Accounting

Illustration of Overhead Variance Analysis

Again for intentions of our demonstrations in overhead variance analysis, we will suppose the given basic data for company in the production of a radio cassette model Stereo F262 as:

Budget for December 2003;

Shs.

Fixed Overheads

11,480

Variable Overheads

13,120

Labour Hours

3,280 hours

Standard Hours of Production

3,280 hours

Actual Results for December 2003

Shs.

Fixed Overheads

12,100

Variable Overheads

13,930

Actual Labour Hours

3,150/hours

Standard Hours of Production

3,280 hours

Note

Based upon our budget above that the predetermined overhead absorption rates can be computed as given as:

F.O.A.R = Budgeted Fixed overhead/ Budgeted activity level

= Shs.11,480/3,280 std hours

= Shs.3.5/h

V.O.A.R = Budgeted Variable overhead/ Budgeted activity level

= Shs.13, 120/3,280 std hours

= Shs.4/h

Total OAR = F.O.A.R + V.O.A.R

= Shs.3.5/h+ Shs.4/h

= Shs.7.5/h

This is also notable from our budget such the budgeted standard hours and the budgeted labour hours of production are the similar: it is the normal planning basis that assumes as the actual labour hours will be the similar as the standard hours actually produced. It would imply such efficiency is as initially planned hence no efficiency variances would arise. Conversely, this is rarely the case in practice and thus the efficiency variances in overhead variances analysis.

Posted Date: 2/7/2013 7:01:26 AM | Location : United States







Related Discussions:- Illustration of overhead variance analysis, Assignment Help, Ask Question on Illustration of overhead variance analysis, Get Answer, Expert's Help, Illustration of overhead variance analysis Discussions

Write discussion on Illustration of overhead variance analysis
Your posts are moderated
Related Questions
The government of a small South Pacific island is considering whether to allow development of a small but valuable deposit of phosphate rock. Not having the resources to develop an

Period Costs Some terms are difficult to define. In one school of thought, period costs are the any costs that are not product costs. But, such a description is a stretch, beca

An industrial drill costs $60.000 to purchase and $10,000 to install seven years ago. The market value now is $33.000 and this will decline by 12% of current value each year for th

LIMITATIONS OF COST ACCOUNTING Cost Accounting similar to additional branches of accountancy is not an precise science although is an art which was developed throughout theorie

i have a factory and 87 employees . we have a closure plan in 12 months. what would be the charges?

Types of Standard Costs The standard cost set could be ideal, basic, attainable or current. i. Basic Standards: These are long term standards that would keep unchanged ov

Elements of Non - Manufacturing costs Non-Manufacturing costs are costs incurred via all activities such support the production of services and goods. They are selling costs

Limitations of CVP Analysis The make use of the basic CVP model is just only relevant to planning and decision-making in an activity range whether the basic cost and revenue b

QUESTION 1: PART A Swatathon Inc. has two production departments (A and B) and two service departments (maintenance and stores). Details of next year's budgeted overheads

tHE FIRST SECTION ASSIGEMTN ANSWER FOR HAMPSHIR COMPANY DECISIONS