question:

Requirements 1 & 2. Calculate the fixed overhead spending variance and indicate whether it is favorable (F) or unfavorable (U). If Divot Down uses direct labor-hours available at capacity to calculate the budgeted fixed overhead rate, what is the production-volume variance? Indicate whether it is favorable (F) or unfavorable (U). Begin by determining the formula then computing the fixed overhead rate per direct labor hour. (Round the fixed overhead rate to the nearest cent.) Budgeted fixed overhead costs Budgeted hours at capacity Fixed overhead rate S 15.600 1,850 8.00 Next, complete the following table. Actual Costs Static Allocated Incurred Budget Overhead 10.500 5.600 7.440 Calculate the fixed overhead spending variance and indicate whether it is favorable (F) or unfavorable (U). Spending variance 5.100 Calculate the fixed overhead production-volume variance and indicate whether it is favorable (F) or unfavorable (U). Production-volume variance 8, 160 Requirement 3. An unfavorable production-volume variance could be interpreted as the economic cost of unused capacity. Why would Divot Down be willing to incur this cost? Select all that apply. A. For most products, demand does not vary from month to month. Divot Down may be willing to incur the cost of unused capacity because it is easy to track and makes budgeting more convenient. [ B. Basic economics provides a demand curve that shows a tradeoff between price charged and quantity demanded. Potentially. Divot Down could have lower net revenue if it produces at capacity and sells at a lower price than if it sells at a higher price at some level below capacity. C. Basic economics provides a demand curve that shows a tradeoff between capacity and actual fixed overhead expenses. This creates an inherent cost of unused capacity over which Divot Down has no control. *D. F For most products, demand varies from month to month. If Divot Down wants to meet demand in high demand months, the company will have excess capacity in low demand months. Having some access capacity would allow Divot Down to produce enough to cover peak demand as well as slack to deal with unexpected demand surges in non-peak months.Requirement 4. Top Par's budgeted variable cost per unit is $20, and it expects to sell its shirts for $55 apiece. Compute the sales-volume variance and reconcile it with the production-volume variance calculated in requirement 2. What does each concept measure? Begin by calculating the static-budget operating income for March. Revenues 71,500 Variable costs 37,700 Fixed overhead costs 15,600 Static-budget operating income 18,200 Next, calculate the flexible-budget operating income for March. Revenues 34,100 Variable costs 17,980 Fixed overhead costs 15,600 Flexible-budget operating income 520 Compute the sales-volume variance and indicate whether it is favorable (F) or unfavorable (U). Sales-volume variance S 17,680 U Now, select the formula and enter the amounts to calculate the operating-income volume variance. Operating-income Static-budget operating income Operating income based on bogt profit per unit volume variance S 18,200 8,680 9,520 Reconcile the sales-volume variance with the production-volume variance calculated in requirement 2. Operating-income volume variance S 9.520 Production-volume variance 8,160 17.680 Sales-volume variance What does each concept measure? The operating-income volume variance assumes that $ 8,160 in fixed costs would be saved if production and sales volume decreased by 680 units.Kinetic Company makes customized golf shirts for sale to golf courses. Each shirt requires 2.5 hours to produce because of the customized logo for each golf course. Kinetic uses direct labor-hours to allocate the overhead cost to production. Fixed overhead costs, including rent, depreciation, supervisory salaries, and other production expenses, are budgeted at $15,000 per month. The facility currently used is large enough to produce 1,500 shirts per month. During March, Kinetic produced 850 shirts and actual fixed costs were $11,200. Read the requirements Requirements 1 & 2. Calculate Requirements etic uses direct labor-hours available at capacity to calculate the budgeted fixed overhead rate. what is the production-volume variance? Indicate whether it is favorable (F) or unfavorable (U). Begin by determining the formu earest cent.) 1. Calculate the fixed overhead spending variance and indicate whether it is favorable (F) or unfavorable (U). 2. If Kinetic uses direct labor-hours available at capacity to calculate the budgeted fixed overhead rate, what is the production-volume variance? Indicate whether it is favorable (F) or unfavorable (U). 3. An unfavorable production-volume variance could be interpreted as the economic cost of unused capacity. Why would Kinetic be willing to incur this cost? 4. Divot Down's budgeted variable cost per unit is $21, and it expects to sell its shirts for $56 apiece. Compute the sales-volume variance and reconcile it with the production-volume variance calculated in requirement 2. What does each concept measure? Print Done