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Beta Capital Company provides financial services to their clients. Recently, Beta has experienced rapid growth rate due to expansion and is becoming concerned as to
Beta Capital Company provides financial services to their clients. Recently, Beta has experienced rapid growth rate due to expansion and is becoming concerned as to their rising costs, particularly their technology overhead costs. Beta had determined the cost driver of both their variable and fixed technology overhead costs to be the number of CPU units of their computer usage. Beta's measure of production" is the number of client interactions. The technology budget for Beta for the first quarter of 2017 are as follows: Client interactions 13,000 Variable Overhead 0.5 CPU units @ $3 per CPU unit Fixed Overhead $19,500 The actual results for the first quarter of 2017 are: Client interactions 14,500 Variable Overhead S22,000 Fixed Overhead $19,200 CPU units used 7,300 Required: 1. Calculate the variable overhead spending and efficiency variances, and indicate whether each is favorable (F) or unfavorable (U). 2. Calculate the fixed overhead spending and production volume variances, and indicate whether each is favorable (F) or unfavorable (U). 3. Comment on Alpha Capital' overhead variances. In your view, is the firm right to be worried about its control over technology spending
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