Question
Clark Companys master budget includes $312,000 for equipment depreciation. The master budget was prepared for an annual volume of 62,400 chargeable hours. This volume is
Clark Companys master budget includes $312,000 for equipment depreciation. The master budget was prepared for an annual volume of 62,400 chargeable hours. This volume is expected to occur uniformly throughout the year. During September, Clark performed 5,600 chargeable hours and recorded $26,800 of depreciation.
Required:
1. Determine the flexible-budget amount for equipment depreciation in September.
2. Compute the spending variance for the depreciation on equipment. Was the variance favorable (F) or unfavorable (U)?
3. Calculate the fixed overhead production volume variance for depreciation expense in September. Was this variance favorable (F) or unfavorable (U)?
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