32) Prorated allocation of production-volume variance results in a higher operating income for current year than if the entire favorable production-volume variance were credited to Cost of Goods Sold.
Diff: 2Objective: 4AACSB: Analytical thinking33) Prorated allocation of production-volume variance has the effect of approximating the allocation of fixed costs based on actual costs and actual output.
Diff: 1Objective: 4AACSB: Analytical thinking34) Neon Company manufactured 2,500 units during April with a total overhead budget of $55,000. However, while manufacturing the 2,500 units the microcomputer that contained the month's cost information broke down. With the computer out of commission, the accountant has been unable to complete the variance analysis report. The information missing from the report is lettered in the following set of data:Variable overhead:Standard cost per unit: 1.2 labor hour at $10 per hourActual costs: $26,250 for 2,250 hoursFlexible budget: aTotal flexible-budget variance: b Variable overhead spending variance: cVariable overhead efficiency variance: d Fixed overhead:Budgeted costs: eActual costs: fFlexible-budget variance: $200 favorable Required:Compute the missing elements in the report represented by the lettered items.