ABC Limited did a comparison of its actual spending of its manufacturing overhead costs with its...
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ABC Limited did a comparison of its actual spending of its manufacturing overhead costs with its forecasted spending for the 2nd quarter of 2018 and compiled the following variance report: Indirect labour Management salaries (FC) Hourly wages (VC) Plant and infrastructure Rent expense (FC) Insurance (FC) Maintenance (VC) Electricity and water (VC) Total manufacturing overheads Forecast R 135 000 1 035 000 18 000 15 000 330 000 18 000 1551 000 Actual R 140 000 1 210 000 18 000 15 500 339 000 23 000 1 745 500 Variance R 5 000 U 175 000 U 0 500 U 9 000 U 5 000 U 194 500 U Variance 3.70% 16.91% 0.00% 3.33% 2.72% 27.78% 12.54% The production and sales forecast was 2 000 units but 2 100 units were actually produced and sold. Explain in detail the steps that ABC Limited should take in conducting its budget variance analysis. ABC Limited did a comparison of its actual spending of its manufacturing overhead costs with its forecasted spending for the 2nd quarter of 2018 and compiled the following variance report: Indirect labour Management salaries (FC) Hourly wages (VC) Plant and infrastructure Rent expense (FC) Insurance (FC) Maintenance (VC) Electricity and water (VC) Total manufacturing overheads Forecast R 135 000 1 035 000 18 000 15 000 330 000 18 000 1551 000 Actual R 140 000 1 210 000 18 000 15 500 339 000 23 000 1 745 500 Variance R 5 000 U 175 000 U 0 500 U 9 000 U 5 000 U 194 500 U Variance 3.70% 16.91% 0.00% 3.33% 2.72% 27.78% 12.54% The production and sales forecast was 2 000 units but 2 100 units were actually produced and sold. Explain in detail the steps that ABC Limited should take in conducting its budget variance analysis.
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1 Analyzing Budget Variances The first step in conducting budget variance analysis is to analyze the variances ABC Limited should review the variances in the report and identify which variances are fa... View the full answer
Related Book For
Horngrens Financial and Managerial Accounting
ISBN: 978-0133866292
5th edition
Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura
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