*cost*Ch8HW_Solutions - Cost Planning and Control ACIS 4214...

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Cost Planning and Control ACIS 4214 Chapter 8 Solutions 8-16 (20 min.) Variable manufacturing overhead, variance analysis. 1. Variable Manufacturing Overhead Variance Analysis for Esquire Clothing for June 2014 Actual Costs Incurred Actual Input Qty. × Actual Rate (1) Actual Input Qty. × Budgeted Rate (2) Flexible Budget: Budgeted Input Qty. Allowed for Actual Output × Budgeted Rate (3) Allocated: Budgeted Input Qty. Allowed for Actual Output × Budgeted Rate (4) (4,536 × $11.50) $52,164 (4,536 × $12) $54,432 (4 × 1,080 × $12) $51,840 (4 × 1,080 × $12) $51,840 2. Esquire had a favorable spending variance of $2,268 because the actual variable overhead rate was $11.50 per direct manufacturing labor-hour versus $12 budgeted. It had an unfavorable efficiency variance of $2,592 U because each suit averaged 4.2 labor-hours (4,536 hours ÷ 1,080 suits) versus 4.0 budgeted labor-hours. Never a variance $2,592 U Efficiency variance $2,268 F Spending variance Never a variance $324 U Flexible-budget variance 1
Cost Planning and Control ACIS 4214 8-17 (20 min.) Fixed-manufacturing overhead, variance analysis (continuation of 8-16). 1 & 2. Budgeted fixed overhead rate per unit of allocation base = 4 040 , 1 400 , 62 $ = 160 , 4 400 , 62 $ = $15 per hour Fixed Manufacturing Overhead Variance Analysis for Esquire Clothing for June 2014 Actual Costs Incurred (1) Same Budgeted Lump Sum (as in Static Budget) Regardless of Output Level (2) Flexible Budget: Same Budgeted Lump Sum (as in Static Budget) Regardless of Output Level (3) Allocated: Budgeted Input Qty. Allowed for Actual Output × Budgeted Rate (4) $63,916 $62,400 $62,400 (4 × 1,080 × $15) $64,800 $1,516 U $2,400 F Spending variance Never a variance Production-volume variance $1,516 U $2,400 F Flexible-budget variance Production-volume variance

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