Flandro Company uses a standard cost system and sets predetermined overhead rates on the basis of direct
Question:
Flandro Company uses a standard cost system and sets predetermined overhead rates on the basis of direct labour-hours. The following data are taken from the company’s budget for the current year:
Required
1. Redo the standard cost card in a clearer, more usable format by detailing the variable and fixed overhead cost elements.
2. Prepare an analysis of the variances for materials and labour for the year.
3. Prepare an analysis of the variances for variable and fixed overhead for the year.
4. What effect, if any, does the choice of a denominator activity level have on unit standard costs? Is the volume variance a controllable variance from a spending point of view? Explain.
Step by Step Answer:
Management Accounting
ISBN: 9780077185534
6th Edition
Authors: Will Seal, Carsten Rohde, Ray Garrison, Eric Noreen