Chapter 8 equations

Question 1

budgeted variable overhead cost rate per output unit equation

Answer 1

budgeted variable overhead cost rate per output unit =
budgeted input allowed per output unit * budgeted variable overhead cost rate per input unit

Question 2

variable overhead flexible budget variance equation

Answer 2

variable overhead flexible budget variance =
actual costs incurred - flexible budget amount

Question 4

variable overhead spending variance equation

Answer 4

variable overhead spending variance =
(actual variable overhead costs per unit of cost allocation base - budgeted variable overhead cost per unit of cost allocation) * actual quantity of variable overhead cost allocation base used

Question 5

fixed overhead flexible budget variance equation

Answer 5

fixed overhead flexible budget variance =
actual costs incurred - flexible budget amount

Question 6

fixed overhead spending variance equation

Answer 6

fixed overhead spending variance =
actual costs incurred - flexible budget amount

Question 7

budgeted fixed overhead cost per unit of cost allocation base equation

Answer 7

budgeted fixed overhead cost per unit of cost allocation base =
budgeted costs in fixed overhead cost pool / budgeted total quantity of cost allocation base

Question 8

production volume variance equation

Answer 8

production volume variance =
budgeted fixed overhead - fixed overhead allocated for actual output units produced

Question 9

fixed overhead allocated for actual output units produced equation

Answer 9

fixed overhead allocated for actual output units produced =
budgeted fixed overhead cost per output unit * actual output units

Question 10

budgeted fixed overhead cost per output unit equation

Answer 10

budgeted fixed overhead cost per output unit =
budgeted quantity of cost allocation base allowed per output unit * budgeted fixed overhead cost per unit of cost allocation base

Question 11

favorable production volume variance = fixed costs are

Answer 11

overallocated
(producing at a level above what is estimated, i.e. “under capacity”)

Question 12

sales volume variance (operating income) equation

Answer 12

sales volume variance =
flexible budgeted operating income - static budgeted operating income

Question 13

fixed overhead production volume variance equation

Answer 13

fixed overehad production volume variance =
budgeted fixed overehad - allocated fixed overhead