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(E) Question 4 (9 marks) Tanya is the newly appointed president of Horizon Products. She is examining the January results for the Aerospace Products Division.
(E) Question 4 (9 marks) Tanya is the newly appointed president of Horizon Products. She is examining the January results for the Aerospace Products Division. This division manufactures wing parts for satellites. Her current concern is with manufacturing overhead costs at the Aerospace Products Division. Both variable and fixed overhead costs are allocated to the wing parts on the basis of laser-cutting-hours. The following budget information is available: Budgeted variable overhead rate Budgeted fixed overhead rate Budgeted laser cutting time per wing part Budgeted production and sales for January Budgeted fixed overliead costs for January $200 per hour $240 per hour 1.5 hours 5.000 wing parts $1,800,000 Actual results for January are: Wing parts produced and sold Laser-cutting-hours used Variable overhead costs Fixed overhead costs 4.800 units 8,400 hours $1,478,400 $1,832,200 a Calculate the spending variance for variable overhead and indicate whether the variance is favourable or unfavourable, (2 marks) b. Calculate the spending variance for fixed overhead and indicate whether the variance is favourable or unfavourable. (2 marks) c. Calculate the production-volume variance for fixed overhead and indicate whether the variance is favourable or unfavourable. (2 marks) d. Give an explanation for each of the variances calculated in Parts a b, and
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