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helppls give the process of functionthx ummm there are all imformation i had showed...i will show u again.thank u Here's the question 8-22 Straightforward 4-variance
helppls give the process of functionthx
ummm there are all imformation i had showed...i will show u again.thank u
8-22 Straightforward 4-variance overhead analysis. The Lopez Company uses standard costing in its manufacturing plant for auto parts. The standard cost of a particular auto part, based on a denominator level of 4,000 output units per year, included 6 machine-hours of variable manufacturing overhead at $8 per hour and 6 machine-hours of fixed manufacturing overhead at $15 per hour. Actual output produced was 4,400 units. Variable manufacturing overhead incurred was $245,000. Fixed manufacturing overhead incurred was $373,000. Actual machine-hours were 28,400. Required: 1. Prepare an analysis of all variable manufacturing overhead and fixed manufacturing overhead variances 2. Prepare journal entries using the 4-variance analysis. 3. Describe how individual fixed manufacturing overhead items are controlled from day to day 4. Discuss possible causes of the fixed manufacturing overhead variances 2. 245,000 Variable Manufacturing Overhead Control Accounts Payable Control and other accounts 245,000 211,200 Work-in-Process Control Variable Manufacturing Overhead Allocated 211.200 Variable Manufacturing Overhead Allocated Variable Manufacturing Overhead Spending Variance Variable Manufacturing Overhead Efficiency Variance Variable Manufacturing Overhead Control 211,200 17,800 16,000 245.000 373,000 Fixed Manufacturing Overhead Control Wages Payable Control, Accumulated Depreciation Control, etc 373,000 396,000 Work-in-Process Control Fixed Manufacturing Overhead Allocated 396,000 Fixed Manufacturing Overhead Allocated 396,000 Fixed Manufacturing Overhead Spending Variance 13,000 Fixed Manufacturing Overhead Production-Volume Variance 36,000 ITTER Fixed Manufacturing Overhead Allocated 396,000 Fixed Manufacturing Overhead Spending Variance 13,000 Fixed Manufacturing Overhead Production-Volume Variance 36,000 Fixed Manufacturing Overhead Control 373,000 3. Individual fixed manufacturing overhead items are not usually affected very much by day-to- day control. Instead, they are controlled periodically through planning decisions and budgeting procedures that may sometimes have horizons covering six months or a year (for example, management salaries) and sometimes covering many years (for example, long-term leases and depreciation on plant and equipment). 4. The fixed overhead spending variance is caused by the actual realization of fixed costs differing from the budgeted amounts. Some fixed costs are known because they are contractually specified, such as rent or insurance, although if the rental or insurance contract expires during the year, the fixed amount can change. Other fixed costs are estimated, such as the cost of managerial salaries, which may depend on bonuses and other payments not known at the beginning of the period. In this example, the spending variance is unfavorable, so actual FOH is greater than the budgeted amount of FOH. The fixed overhead production volume variance is caused by production being over or under expected capacity. You may be under capacity when demand drops from expected levels or if there are problems with production. Over capacity is usually driven by favorable demand shocks or a desire to increase inventories. The fact that there is a favorable volume variance indicates that production exceeded the expected level of output (4,400 units actual relative to a denominator level of 4,000 output units). 3 A detailed comparison of actual and flexible budgeted amounts is: (Note: Show your workings) Actuale Flexible Budget e Output units (auto parts) Allocation base (machine-hours) Allocation base per output unite Variable MOH Variable MOH per hour Fixed MOH Fixed MOH per hour ttt 22 Analysis of all variable manufacturing overhead using the 4-variance analysis.- Actual Costs Incurred Actual Input Qty. x Actual Ratee (1) Actual Input Qty. x Budgeted Rate (2) Flexible Budget: Allocated: Budgeted Input Qty. Budgeted Input Qty. Allowed for Allowed for Actual Output Actual Output * Budgeted Rate * Budgeted Rate 3 a 3 e Spending variance Efficiency variance Never a varianced e e t Flexible Budget variance Never a variancee e Underallocated variable overhead (Total variable overhead variance) 7 Analysis of all fixed manufacturing overhead variances, using the 4-variance analysis. The budget for Fixed Manufacturing Overhead e Actual Costs Incurred Flexible Budget: Same Budgeted Same Budgeted Lump Sum Lump Sum (as in Static Budget) (as in Static Budget) Regardless of Regardless of Output Level Output Level (2) (3) Allocated: Budgeted Input Qty. Allowed for Actual Output * Budgeted Rate e e Spending variance Never a variance e Production-volume variance e Flexible Budget variance Production-volume Variance e Overallocated Fixed Overhead (Total Fixed Overhead Variance) TYG 8-22 Straightforward 4-variance overhead analysis. The Lopez Company uses standard costing in its manufacturing plant for auto parts. The standard cost of a particular auto part, based on a denominator level of 4,000 output units per year, included 6 machine-hours of variable manufacturing overhead at $8 per hour and 6 machine-hours of fixed manufacturing overhead at $15 per hour. Actual output produced was 4,400 units. Variable manufacturing overhead incurred was $245,000. Fixed manufacturing overhead incurred was $373,000. Actual machine-hours were 28,400. Required: 1. Prepare an analysis of all variable manufacturing overhead and fixed manufacturing overhead variances 2. Prepare journal entries using the 4-variance analysis. 3. Describe how individual fixed manufacturing overhead items are controlled from day to day 4. Discuss possible causes of the fixed manufacturing overhead variances Cont'd ... 8-22 Straightforward 4-variance overhead analysis. 2. 245,000 Variable Manufacturing Overhead Control Accounts Payable Control and other accounts 245,000 211,200 Work-in-Process Control Variable Manufacturing Overhead Allocated 211,200 211,200 Variable Manufacturing Overhead Allocated Variable Manufacturing Overhead Spending Variance Variable Manufacturing Overhead Efficiency Variance Variable Manufacturing Overhead Control 17,800 16,000 245,000 373,000 Fixed Manufacturing Overhead Control Wages Payable Control, Accumulated Depreciation Control, etc. 373,000 396,000 Work-in-Process Control Fixed Manufacturing Overhead Allocated 396,000 211,200 Work-in-Process Control Variable Manufacturing Overhead Allocated 211,200 Variable Manufacturing Overhead Allocated Variable Manufacturing Overhead Spending Variance Variable Manufacturing Overhead Efficiency Variance Variable Manufacturing Overhead Control 211,200 17,800 16,000 245,000 373,000 Fixed Manufacturing Overhead Control Wages Payable Control, Accumulated Depreciation Control, etc. 373,000 396,000 Work-in-Process Control Fixed Manufacturing Overhead Allocated 396,000 Fixed Manufacturing Overhead Allocated 396,000 Fixed Manufacturing Overhead Spending Variance 13,000 Fixed Manufacturing Overhead Production-Volume Variance Fixed Manufacturing Overhead Control 36,000 373.000 Fixed Manufacturing Overhead Spending Variance 13,000 Fixed Manufacturing Overhead Production-Volume Variance Fixed Manufacturing Overhead Control 36,000 373,000 3. Individual fixed manufacturing overhead items are not usually affected very much by day-to- day control. Instead, they are controlled periodically through planning decisions and budgeting procedures that may sometimes have horizons covering six months or a year (for example, management salaries) and sometimes covering many years (for example, long-term leases and depreciation on plant and equipment). 4. The fixed overhead spending variance is caused by the actual realization of fixed costs differing from the budgeted amounts. Some fixed costs are known because they are contractually specified, such as rent or insurance, although if the rental or insurance contract expires during the year, the fixed amount can change. Other fixed costs are estimated, such as the cost of managerial salaries, which may depend on bonuses and other payments not known at the beginning of the period. In this example, the spending variance is unfavorable, so actual FOH is greater than the budgeted amount of FOH. The fixed overhead production volume variance is caused by production being over or under expected capacity. You may be under capacity when demand drops from expected levels or if there are problems with production. Over capacity is usually driven by favorable demand shocks or a desire to increase inventories. The fact that there is a favorable volume variance indicates that production exceeded the expected level of output (4,400 units actual relative to a denominator level of 4,000 output units) 3 HE 8-22 Straightforward 4-variance overhead analysis. A detailed comparison of actual and flexible budgeted amounts is: (Note: Show your workings) Actuale Flexible Budgete Output units (auto parts) Allocation base (machine-hours) Allocation base per output unite Variable MOH Variable MOH per houre Fixed MOH Fixed MOH per houre e Analysis of all variable manufacturing overhead using the 4-variance analysis. Actual Costs Incurred 4 ntul nu Flexible Budget: Allocated: Budgeted Input Qty. Budgeted Input Qty. Allowed for Allowed for Actual Innut Oy Analysis of all variable manufacturing overhead using the 4-variance analysis. Actual Costs Incurred Actual Input Qty. X Actual Rate (1) Actual Input Qty. * Budgeted Rate (2) Flexible Budget: Allocated: Budgeted Input Qty. Budgeted Input Qty. Allowed for Allowed for Actual Output Actual Output x Budgeted Rate * Budgeted Rate Spending variance Efficiency variance Never a variancee Flexible Budget variance Never a variance Underallocated variable overhead (Total variable overhead variance) Cont'd ... 8-22 Straightforward 4-variance overhead analysis. Analysis of all fixed manufacturing overhead variances, using the 4-variance analysis. The budget for Fixed Manufacturing Overhead Actual Costs Incurred Flexible Budget: Same Budgeted Same Budgeted Lump Sum Lump Sum (as in Static Budget) (as in Static Budget) Regardless of Regardless of Output Level Output Level (3) Allocated: Budgeted Input Qty. Allowed for Actual Output X Budgeted Rate Spending variance Never a variance Production-volume variance D. CO Actual Costs Incurred Flexible Budget: Same Budgeted Same Budgeted Lump Sume Lump Sum (as in Static Budget) (as in Static Budget) Regardless of Regardless of Output Level Output Level (2) (3) Allocated: Budgeted Input Qty. Allowed for Actual Output x Budgeted Rate Spending variance Never a variance Production-volume variancee Flexible Budget variance Production-volume- Variance Overallocated Fixed Overhead (Total Fixed Overhead Variance) e Here's the question
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