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Two-Variance Analysis: Service Company Example International Finance Incorporated issues letters of credit to importers for overseas purchases. The company charges a nonrefundable application fee of $3,000 and, on approval, an additional service fee of 2% of the amount of credit requested. The firm's budget for the year just completed included fixed expenses for office salaries and wages of $500,000, leasing office space and equipment of $50,000, and utilities and other operating expenses of $10,000. In addition, the budget also included variable expenses for supplies and other variable overhead costs of $1,000,000. The company estimated these variable over-head costs to be $2,000 for each letter of credit approved and issued. The company approves, on average, 80% of the applications it receives. During the year, the company received 600 requests and approved 75% of them. The total variable overhead was 10% higher than the standard amount applied; the total fixed expenses were 5% lower than the amount budgeted. In addition to these expenses, the company paid a $270,000 insurance premium for the letters of credit issued. The insurance premium is 1% of the amount of credits issued in U.S. dollars. The actual amount of credit issued often differs from the amount requested due to fluctuations in exchange rates and variations in the amount shipped from the amount ordered by importers. The strength of the dollar during the year decreased the insurance premium by 10%. **Required 1. Calculate the (a) variable, and (b) fixed overhead rates for the year. 2. Prepare an analysis of the overhead variances for the year just completed. (a) What is the total controllable (i.e., flexible-budget) variance for the period? (b) What is the overhead volume variance for the period? ( Hint: These two should sum to $88,000U.)
mike and michelle decided to liquidate their jointly owned corporation pennsylvania corporation. after liquidating its
Carleton Service Center just purchased an automobile hoist for $15,000.The hoist has a 5-year life and an estimated salvage value of $1,080. Installation costs were $2,900, and freight charges were $820. Carleton uses straight-line depreciation.
the financial statement of burces antiques reflects cash of 213000 collectible accounts recevible of 37700accounts
Oaks Edge Company's budgeted sales were 22,500 units at $76 per unit. Actual sales were 21,750 units at $79 per unit. What was Oaks Edge sales price variance?
xyz co had the following payroll transactions for the first pay period in 2012.wages 13000federal income tax withheld
which of the following principles require the application of the lower-of-cost-or-market rule? answer accounting
The Connecting company uses the percent of sales method of accounting for uncollectible accounts receivable. During the current year, the following transaction occurred: Prepare the general journal entries to record these transactions.
Equipment acquired under capital leases and used by activities accounted for in governmental funds should be recorded in the governmental activities accounts at the inception of the lease at:
There is a $40,000 realized gainon the sale of the land and no realized gain or loss on the sale ofthe bonds. Are the tax consequences to Ivan and Grace the same for each of the five years? Explain.
What types of costs are included in raw material inventory, work-in-process inventory, and finished goods inventory?
meredith cleaners has the following balance sheet items.
From the standpoint of accounting theory, which one of the following statements is the best one to support the preparation of consolidated financial statements?
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