Forums › ACCA Forums › ACCA MA Management Accounting Forums › Calculating variable & fixed variances
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- September 27, 2013 at 12:57 am #141500
Hi
I am trying to calculate the variable spending, variable efficiency, fixed spending and fixed volume for the below problem but keep getting it wrong. Can someone please assist. Thanks.
BUDGET DATA FOR DANCE
Production budget standards for: 2100 units
Direct materials (fabric)
1.5 metres $7.50 per metre
Direct labour 1 hour $18.50 per hour
Variable overhead $2.80 per hour
Fixed overhead $4.75 per hourOverhead costs for Dance have been determined as follows: An overhead budget is determined for a particular period for the Shoe Section as a whole. This cost is shared across the three product lines for budgeting and variance calculation purposes in proportion to the budgeted direct labour hours. The fixed overhead rate is calculated taking standard (budget) data for all three lines of the product into account .
Budgeted fixed overhead for the period is $21,000.00
The budgeted fixed overhead for Dance is $9,975.00
Based on the production budget for the total number of units:
Number of units DL hour per unit
Dance 2100 1
Run. 1200. 0.5
Walk 750. 2Non-manufacturing costs
Budgeted and actual selling and administrative costs related to Dance are as follows:
Variable costs per unit are $1.00 ; and
Fixed costs for the period total is $2,000.00ACTUAL DATA
There is no opening or closing WIP, and no inventory of direct materials on hand at the beginning of the period.
Standard costs in Finished Goods have not changed from last period, opening inventory is 500 units..
Number of units produced in the period is 2200
Units sold in the period 1800 at $75.00 per unitPurchases of direct materials for cash 3500 metres at $8.20 per metre
Direct materials used in the period 3400 metres
Direct labour hours worked in production 2400 DL hours at $20.00 per hour
Actual variable overhead $3.00 per DL hour
Dance share of actual fixed overhead $11,500.00 ** Actual fixed overhead incurred by the Shoe Department is $19,500.00
This is shared for the purposes of variance calculation in proportion to the actual direct labour hours incurred. After consulting data related to Walk and Run, Dance incurs actual fixed overhead as stated above. (For the journal entries, credit Accounts Payable for actual overhead incurred.)Expected usage of the resources by the different products (based on budgeted
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