Answered step by step
Verified Expert Solution
Question
1 Approved Answer
King Burger Company (KBC) creates food to be sold at fast food restaurants. KBC estimated that it would operate its food manufacturing facilities at 800,000
King Burger Company (KBC) creates food to be sold at fast food restaurants. KBC estimated that it would operate its food manufacturing facilities at 800,000 direct labour hours for the year, which served as the denominator activity in the predetermined overhead rate. The total budgeted manufacturing overhead for the year was $2,000,000, of which $1,600,000 was variable and $400,000 was fixed. The standard variable overhead rate was $2 per direct labour hour. The standard direct labour time was 3 direct labour hours per unit. The actual results for the year are presented below: Actual Finished Units 250,000 Actual Direct Labour Hours 764,000 Actual Variable Overhead Actual Fixed Overhead $1,610,000 $392,000 Required: A) What was the variable overhead spending variance for the year? B) What was the variable overhead efficiency variance for the year? C) What was the fixed overhead budget variance for the year? ment D) What was the fixed overhead volume variance for the year? E) Explain the meaning of the two variable overhead variances you computed above. What do they represent? Why might they have happened? F) Which of the four variances you computed above is the most important to address? Why? How might the company address it
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started