ACCT 5302

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ACCT 5302

Review Questions with ANSWERS

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ACCT 5302

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Question 3 Straightforward Variance Analysis Carlos, Inc., uses a standard cost system when accounting for its sole product. Planned production is 50,000 process hours per month, which gives rise to the following per-unit standards: Variable overhead: 15 hours at $12 per hour Fixed overhead: 15 hours at $5 per hour During September, 3,200 units were produced and the company incurred the following overhead costs: variable, $601,000; fixed, $236,000. Actual process hours totaled 48,500. Required: A. Calculate the spending and efficiency variances for variable overhead. B. Calculate the over- or under-applied variable overhead.
ANSWER A. Spending variance: $601,000 (48,500 x $12) = $19,000U Efficiency variance: (48,500 x $12) (3,200 x 15 x $12) = $6,000U

B.

ACCT 5302

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ACCT 5302

Review Questions with ANSWERS

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ACCT 5302

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Question 6 - Constrained Resources Closter Corporation makes three products that use the current constraint, which is a particular type of machine. Data concerning those products appear below:

Required: a. Rank the products in order of their current profitability from the most profitable to the least profitable. In other words, rank the products in the order in which they should be emphasized. Show your work! b. Assume that sufficient constraint time is available to satisfy demand for all but the least profitable product. Up to how much should the company be willing to pay to acquire more of the constrained resource? ANSWER:

ACCT 5302

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ACCT 5302

Review Questions with ANSWERS

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ACCT 5302

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Question 8 ANSWER