Four-variance analysis, working backwards. Lookmeup.com is striving to become a Web portal. The site allows surfers to
Question:
Four-variance analysis, working backwards. Lookmeup.com is striving to become a Web portal. The site allows surfers to find anything they want to look up—be it a person, a site, a company, or news article—through one interactive and easy-to-use interface. Most of Lookmeup.
com’s operating overhead is due to Internet connection costs. Lookmeup.com faces both fixed and variable Internet connection charges. Following is the four-variance analysis of Lookmeup.com’s operations overhead:
REQUIRED ;
1. For total operating overhead, compute the following:
a. Spending variance
b. Efficiency variance Flexible Budgets, Variances, Cc. Production-volume variance
d. Flexible-budget variance
e. Total overhead variance Present your results in a suitable format for presenting three-variance, two-variance, and one-variance analyses.
2. If Lookmeup.com’s total actual operating overhead was $420,000, what was the operating overhead allocated to actual output units provided?
3. Can you say whether fixed operating overhead was underallocated or overallocated? If so, by what amount? ;
4. Are Lookmeup.com’s different variances in the four-variance analysis above necessarily independent? Explain and provide an example.LO1
Step by Step Answer:
Cost Accounting A Managerial Emphasis
ISBN: 9780135004937
5th Canadian Edition
Authors: Charles T. Horngren, Foster George, Srikand M. Datar, Maureen P. Gowing