Cake Company manufactures different types of cakes for evening-parties. The usual order for a party includes...
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"Cake" Company manufactures different types of cakes for evening-parties. The usual order for a party includes a few cakes: chocolate, honey, layer or particular birthday cake. The company budgets sales and its costs, not excluding overheads. The costs of the accounting department, busy invoicing customers are budgeted proportionally to the number of orders. The following information relates to Cake's ordering activity during the last month: Budget Output Activity level 7 000 cakes 2 000 orders Total cost of accounting department invoicing 120 000 rubles activity Actual Output 7 500 cakes Activity level 2 400 orders Total cost of accounting department invoicing 139 200 rubles activity Required: (a) Calculate the overhead expenditure variance (b) Calculate the overhead efficiency variance (c) Explain the usefulness of this variance analysis "Cake" Company manufactures different types of cakes for evening-parties. The usual order for a party includes a few cakes: chocolate, honey, layer or particular birthday cake. The company budgets sales and its costs, not excluding overheads. The costs of the accounting department, busy invoicing customers are budgeted proportionally to the number of orders. The following information relates to Cake's ordering activity during the last month: Budget Output Activity level 7 000 cakes 2 000 orders Total cost of accounting department invoicing 120 000 rubles activity Actual Output 7 500 cakes Activity level 2 400 orders Total cost of accounting department invoicing 139 200 rubles activity Required: (a) Calculate the overhead expenditure variance (b) Calculate the overhead efficiency variance (c) Explain the usefulness of this variance analysis
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To calculate the overhead expenditure variance and the overhead efficiency variance we can use the following formulas a Overhead Expenditure Variance Overhead Expenditure Variance measures the differe... View the full answer
Related Book For
Cornerstones of Cost Management
ISBN: 978-1285751788
3rd edition
Authors: Don R. Hansen, Maryanne M. Mowen
Posted Date:
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