12. Company DEF has provided the following data about its variable overhead costs and its allocation...
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12. Company DEF has provided the following data about its variable overhead costs and its allocation base, machine hours, for March 2021: Actual Budgeted 12,700 units Output units Machine hours (MH) Variable overhead cost per MH 12,700 units 4,400 MH $8.20 per MH 3,500 MH $10.00 per MH You are responsible for analyzing the variable overhead costs and providing all the variance details on the variable overhead cost performance each month. Pete is a new intern working with you on this project and when he sees this data, Pete says, "Well, this is an easy task. The company produced exactly what it planned to in March, so there is no need to do any variance analysis on the variable overhead costs. Our output matched what the budget said it would be so there will not be any variable overhead variances this month." (a) How would you respond to Pete? Is his assessment correct? Why or why not? (b) Identify which, if any, of the variable overhead variances we learned that Company DEF has and explain why. (c) What, if anything, should the company focus on improving related to its variable overhead? (d) What, if anything, is the company doing well related to its variable overhead? 12. Company DEF has provided the following data about its variable overhead costs and its allocation base, machine hours, for March 2021: Actual Budgeted 12,700 units Output units Machine hours (MH) Variable overhead cost per MH 12,700 units 4,400 MH $8.20 per MH 3,500 MH $10.00 per MH You are responsible for analyzing the variable overhead costs and providing all the variance details on the variable overhead cost performance each month. Pete is a new intern working with you on this project and when he sees this data, Pete says, "Well, this is an easy task. The company produced exactly what it planned to in March, so there is no need to do any variance analysis on the variable overhead costs. Our output matched what the budget said it would be so there will not be any variable overhead variances this month." (a) How would you respond to Pete? Is his assessment correct? Why or why not? (b) Identify which, if any, of the variable overhead variances we learned that Company DEF has and explain why. (c) What, if anything, should the company focus on improving related to its variable overhead? (d) What, if anything, is the company doing well related to its variable overhead?
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a Assessment of Peter is not right Peters assessment is based on output units comparison rather than ... View the full answer
Related Book For
Financial Accounting
ISBN: 978-0133427530
10th edition
Authors: Walter Harrison, Charles Horngren, William Thomas
Posted Date:
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