q1

Swiss Company makes large decorative clocks. The budgeted fixed overhead costs for 2020 totalled $27,000. The company uses direct labour hours for fixed overhead

allocation and anticipated it would use 900 hours during 2020 to make 45,000 clocks.

The actual number of clocks produced in 2020 was 48,000 and they required 960 labour hours to make. Actual spending on fixed overheads was $28,000.

Required:

1. Compute the fixed overhead spending variance. (4 marks)

2. Compute the production volume variance. (4 marks)

q2

On January 3, 2020, Xenex Innovations purchased computer equipment for $125,250. The equipment will be used in research and development activities for five years or a total of 8,500 hours and then sold for about $19.000. Prepare a schedule with headings as shown below. Calculate depreciation and book values for each year of the equipment's life for each method of depreciation. Xenex's year-end is December 31. Straight-Line Year Depreciation Book Value at Expense Dec. 31 Double-Declining-Balance Depreciation Book Value at Expense Dec. 31 Units-of-Production* Depreciation Book Value at Expense Dec. 31 *Assume actual usage in hours of 2020 2021 2022 2023 2024 1350 1.780 2,400 2,980 2,700 Analysis Component: Which method will result in the greatest: a. Total assets being reported on the balance sheet in 2020? in 2023? b. Operating expenses being reported on the income statement in 2020? in 2023?