Overhead Variances for a Department. The following flexible budget information has been prepared for the Fabrication Department
Question:
Overhead Variances for a Department. The following flexible budget information has been prepared for the Fabrication Department of Abbott Industries:
Factory overhead is allocated on the basis of machine hours. The standard calls for ten units of product per machine hour.
During May, 4,650 machine hours were actually worked; and 48,530 units of product were produced. The following actual overhead costs were incurred:
\section*{Required:}
1. Prepare a report that shows each category of overhead cost with individual budget variances.
2. What are the major potential causes of the budget variances?
3. Calculate an overall capacity variance for the department.
Step by Step Answer:
Managerial Accounting
ISBN: 9780538842822
9th Edition
Authors: Harold M. Sollenberger, Arnold Schneider, Lane K. Anderson