Estimate fixed overhead variances, Cost Accounting

Assignment Help:

Estimate Fixed Overhead Variances

271_Estimate Fixed Overhead Variances.png

Referring to data, we can estimate the fixed overhead variances as given below:

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

Fixed Overhead Expenditure Variance is:

=  Actual Fixed Overheads - Budgeted Fixed Overheads

= Shs.12,100 - Shs.11,480 = Shs.620  (Unfavourable)

Fixed Overhead Capacity Variance is:

= Budgeted fixed Overheads - (Actual Hours x F.O. A. R)

=  Shs.11,480 - (3,150 x 3.5) = Shs.455 Unfavourable

Fixed Overhead Efficiency Variance is:

=  (Actual Hours x F.O.A.R) - (Standard Production Hours x F.O.A.R)

= (3,150 X 3.5) - #,230 X 3.5) = Shs.280 Favourable.

Fixed Overhead Volume Variance is:

= Fixed Overhead Capacity Variance + Fixed Overhead Efficiency Variance.

= 455 (U) + 280 (F) = Shs.175 (Unfavourable)

Fixed Overhead Variance is:

= Fixed Overhead Expenditure Variance + Fixed Overhead Volume Variance

= Shs.620 (Unfavourable) + Shs.175 (Unfavourable)

= Shs.795 (Unfavourable).

The approach described so long is the most generally used especially for examination.  Another cause that the student must be confident enough along with so long for further insights the student could proceed to the given section.


Related Discussions:- Estimate fixed overhead variances

Developing and insight into labour and material variance, Developing and In...

Developing and Insight into Labour and Material Variance The calculation of labour and material variances is not sufficient; we require knowing how the variance could have typ

Mr, Extracts from P Co''s records for last month are as follows: ...

Extracts from P Co''s records for last month are as follows: BUDGET ACTUAL PRODUCTION 7,000 UNITS 7,200 UNITS Direct Material $42,000 $42,912 Calculate

Evaluate the expected earning, During his career in the energy industry, T-...

During his career in the energy industry, T-Bone McAdams has accumulated $5,000,000 in "surplus savings" that he is planning to donate to his college alma mater, Oklahoma A&M, in

Calculate the amount of gross profit, Samuel Construction Company engaged i...

Samuel Construction Company engaged in a contract to construct a building on 1 July 2011 with completion of the contract by the 30 June 2014.  The contract price amounted to a tota

Business management, Business Management Business Management includes ...

Business Management Business Management includes planning and staffing, organizing, directing and controlling an organization's activities so like to meet a specified objectiv

Prepare a flexible overhead budget, Under a contract with the provincial go...

Under a contract with the provincial government, ChemLabs Inc. analyzes the chemical and bacterial composition of well water in various municipalities in the interior of British Co

Usefulness of variance analysis, Usefulness of Variance Analysis Caref...

Usefulness of Variance Analysis Carefully note that while prices are being charged to production, it can be done at the actual or standard price. For purposes of making varian

Cost classification, Identify and explain many classification of costs for ...

Identify and explain many classification of costs for planning, control, performance evaluation and decision making.

Marginal costing, The profit volume ratio of xltd. is 50% and the margin of...

The profit volume ratio of xltd. is 50% and the margin of safety is 40%.you are required to calculate the net profit if sales volume is rs.100,000?

Keogh plan, Most of David's clients are local. However, a few of his client...

Most of David's clients are local. However, a few of his clients require out of town travel. He incurred $2,500 of airfare, $1,570 in lodging and $1,313 in meals relating to the bu

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd