ACTG2020_Week8 Ch9_2014

00 300 050 750 flexible budget 8000 variances 0 34000

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Unformatted text preview: Fixed costs Depreciation Insurance Total fixed cost Total overhead costs $ $ $ 12,000 2,000 8,000 $ 32,000 4.00 3.00 0.50 7.50 Actual Results 8,000 Machine hours Flexible Budget $ 34,000 25,500 3,800 $ 63,300 Variances 0 $ 2,000 U $ 12,000 2,050 $ 14,050 $ 77,350 LO 4 Flexible Budget Performance Report CheeseCo Cost Formula per Hour Total Fixed Cost Variable costs Indirect labour Indirect material Power Total variable cost Fixed costs Depreciation Insurance Total fixed cost Total overhead costs $ $ $ 12,000 2,000 8,000 $ 32,000 24,000 4,000 $ 60,000 4.00 3.00 0.50 7.50 Actual Results 8,000 Machine hours Flexible Budget $ 34,000 25,500 3,800 $ 63,300 $ 2,000 U 1,500 U 200 F $ 3,300 U $ 12,000 2,000 $ 14,000 $ 74,000 $ 12,000 2,050 $ 14,050 $ 77,350 $ Variances 0 0 50 U 50 U $ 3,350 U LO 4 Flexible Budget Performance Report Remember the questi on: “How much of the tot al variance is due to low er activity and how muc h is due to cost control?” Static Budgets and Performance How much of the $11,650 favourable variance is due to lower activity and how much is due to cost control? S tatic Budget Machine hours Variable costs I ndirect labour I ndirect materials Power Fixed costs Depreciation I nsurance Total overhead costs Actual Results Variances 10,000 8,000 2,000 U $ 40,000 30,000 5,000 $ 34,000 25,500 3,800 $6,000 F 4,500 F 1,200 F 12,000 2,000 12,000 2,050 0 50 U $ 89,000 $ 77,350 $11,650 F LO 4 Flexible Budget Performance Report Overhead Variance Analysis Static Overhead Budget at 10,000 Hours $ 89,000 Let’s place the flexible budget for 8,000 hours here. Actual Overhead at 8,000 Hours $ 77,350 Difference between original static budget and actual overhead = $11,650 F. LO 4 Flexible Budget Performance Report Overhead Variance Analysis Static Overhead Budget at 10,000 Hours $ 89,000 Flexible Overhead Budget at 8,000 Hours $ Activity This $15,000F variance is due to lower activity. 74,000 Actual Overhead at 8,000 Hours $ 77,350 Cost control This $3,350U variance is due to poor cost control. LO 4...
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This note was uploaded on 03/28/2014 for the course ACTG 2020 taught by Professor Lizfarrel during the Spring '11 term at York University.

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