Bhimani, Horngren,
Datar and Rajan,
Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012
Flexible budget (Budgeted input allowed for actual Actual costs Actual input output achieved incurred × Budgeted rate × Budgeted rate) (1) (2) (3) Variable
Manufacturing
(315,000 × SKr0.59)
(330,000 × SKr0.59) Overhead SKr186,000
*
SKr185,850
SKr194,700
SKr150 U
SKr8,850 F
(2) Spending variance (4) Efficiency variance
*
Known figure.
Allocated (Budgeted input Same lump sum Same lump sum allowed for actual Actual costs regardless of regardless of output achieved incurred output level output level ×
Budgeted rate Fixed
manufacturing (330,000
×
SKr0.61) overhead SKr189,000
SKr183,000
SKr183,000
SKr201,300
SKr6,000 U
SKr18,300 F
(3) Spending variance Never a variance
(4) Efficiency variance Alternative calculation of the production-volume variance
= Budgeted hours allowed for actual output achieved Denominator hours × Budgeted fixed overhead rate
=
(
)
3,600,000
(330,000)
× SKr 0.61 12
−
= (330,000
− 300,000) × SKr0.61 = SKr18,300 F
16.24 Review of Chapters 15 and 16, variance analysis. (30–50 min)
1 Total standard production costs are based on 7,800 units of output.
Direct materials, 7,800
×
€15.00
(or
7,800
×
3 kg
×
€5.00 or 23,400 kg
×
€5.00)
117,000 Direct manufacturing labour, 7,800
×
€75.00
(or
7,800
×
5 hours
×
€15.00 or 39,000 hours
×
€15.00)
585,000 Manufacturing overhead
Variable,
7,800
×
€30.00 (or 39,000 hours
×
€6.00)
234,000
Fixed,
7,800
×
€40.00 (or 39,000 hours
×
€8.00)
312,000 Total €1,248,000
Bhimani, Horngren, Datar and Rajan,
Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012 The following is for later use Fixed manufacturing overhead, a lump-sum budget Fixed manufacturing overhead rate = Budgeted fixed manufacturing overhead
Denominator level €8.00
= Budget hours
Budget = 40,000 hours × €8.00 = €320,000
2 Solution Exhibit 16.22 presents a columnar presentation of the variances. An overview of the variance analysis using the
block format of the text is Share with your friends: 
