Theoretical capacity 262,500 units 

Practical capacity 210,000 units 

Normal capacity utilization 196,000 units 

Selling price $39 per unit 

Beginning inventory 20,000 units 

Production 205,000 units 

Sales volume 220,000 units 

Variable budgeted manufacturing cost $8 per unit 

Total budgeted fixed manufacturing costs $2,940,000 

Total budgeted operating (non-manuf.) costs (all fixed) $230,000

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Cleary Corporation is a manufacturer of computer accessories. It uses absorption costing based on standard costs and reports the following data for 2014: EE (Click the icon to view the data.) There are no price, spending, or efficiency variances. Actual operating costs equal budgeted operating costs. The production-volume variance is written off to cost of goods sold. For each choice of denominator level, the budgeted production cost per unit is also the cost per unit of beginning inventory. Read the requirements. Requirement 1. What is the production-volume variance in 2014 when the denominator level is (a) theoretical capacity, (b) practical capacity, and (c) normal capacity utilization? Begin by determining the formula that is used to calculate the production-volume variance. (Abbreviations used: Bdgt = Budgeted, Mfg. - Manufacturing.) Production- >= volume variance Next calculate the production-volume variance for each denominator level (a) theoretical capacity, (b) practical capacity, and (c) normal capacity utilization. Label each variance as favorable (F) or unfavorable (U). Production- volume variance Capacity type (a) Theoretical (b) Practical (c) Normal Cleary Corporation is a manufacturer of computer accessories. It uses absorption costing based on standard costs and reports the following data for 2014: EE (Click the icon to view the data.) There are no price, spending, or efficiency variances. Actual operating costs equal budgeted operating costs. The production-volume variance is written off to cost of goods sold. For each choice of denominator level, the budgeted production cost per unit is also the cost per unit of beginning inventory. Read the requirements. Requirement 1. What is the production-volume variance in 2014 when the denominator level is (a) theoretical capacity, (b) practical capacity, and (c) normal capacity utilization? Begin by determining the formula that is used to calculate the production-volume variance. (Abbreviations used: Bdgt = Budgeted, Mfg. - Manufacturing.) Production- >= volume variance Next calculate the production-volume variance for each denominator level (a) theoretical capacity, (b) practical capacity, and (c) normal capacity utilization. Label each variance as favorable (F) or unfavorable (U). Production- volume variance Capacity type (a) Theoretical (b) Practical (c) Normal

Answer rating: 100% (QA)

During 2014 Donaldson had a drop of 15000 units in inventory levels The smaller the denominator level the larger is the budgeted fixed cost allocated ... View the full answer