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Chapter_11_Flexible_Budgets_D1

Chapter_11_Flexible_Budgets_D1 - Flexible Budgets and...

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    Flexible Budgets and  Overhead Analysis
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    Agenda Discuss Static Budgets Introduce Flexible Budgets Explain Spending Variances Create Own Budget 11-30
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    Static Budget Larch Company, which makes a single product, bases its budgets for manufacturing overhead on the following data Variable overhead cost category  Standard  Cost Per Unit  Maintenance ..............................   $0.60  Indirect materials .......................   1.40  Utilities ......................................    1.00   Total variable overhead cost ........   $3.00       Fixed overhead cost category  Budgeted  Annual Cost  Depreciation ..............................   $ 40,000  Supervision ................................   50,000  Insurance ..................................      10,000   Total fixed overhead cost ............   $100,000   
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    Larch Company originally planned to produce and sell 10,000 units during  the year, but actual activity was only 8,000 units.  Larch Company  Comparison of Actual Overhead Costs  to Budgeted Overhead Costs        Original        Actual  Budget  Variance    Units produced and sold .....        8,000       10,000    2,000   U            Variable overhead costs:          Maintenance ...................   $   4,500  $    6,000  $1,500  F 
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