vaue 125 points Exercise 8-7 Cost variances LO C2 Presented below are defntions
ID: 2557769 • Letter: V
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vaue 125 points Exercise 8-7 Cost variances LO C2 Presented below are defntions of certain terms Select the appropriate term from the dropdown list The diference between actual and budgeted sales or cost caused by the diference between the actual price per unit and the budgeted price per unit A planning budget based on a single predicted amount of sales or production volume, unsuitable for evaluations if the actual volume differs from the predicted valurne 3 Preset costs for delivering a product, component, or service under normal conditions A process of examining the differences between actual and budgeted sales or costs and describing them in terms of the amounts that resulted from price and quantity differences The difderence between the total budgeted overhead cost and the overhead cost that was allocated to products using the predetermined fixed overhead rate A budget prepared based on predicted amounts of revenues and expenses corresponding to the actual level of output The difference between actual and budgeted cost caused by the diference between the actual quantity and the budgeted quantity 8 The combination of both overhead spending variances (yariable and fixed) and the variable overhead efficiency variance A management process to focus on significant variances and give less attention to areas where Ferformance is close to the standard 10 The diference betvreen actual cost and standard cost, made up of a price variance and a quantrty variance References eBook & ResourcesExplanation / Answer
2- exercises 8-8
(a) Standard cost per unit:
Direct Material 48
Direct Labour 32
Variable O/H 24
Total 104
(b) Total Cost Variance
Standard Cost
Direct Materail ( 8000 units * 6lbs * $8) = 384000
Direct Labour (8000 units * 2 hrs * $16) = 256000
Variable O/H (8000 units * 2 hrs * $12) = 192000
Total Standard Cost = $832000
Actual Cost
Direct Materail ( 48500 units * $8.10) = 392850
Direct Labour (15700 units * $16.50) = 259050
Variable O/H = 198000
Total Actual Cost = $849900
Total Cost Variance = Standard Cost - Actual Cost
= 832000 - 849900
= $17900 (Unfavorable)
Note : You have put more than 1 question in the Board
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