Page 163 - DMGT514_MANAGEMENT_CONTROL_SYSTEMS

Management Control Systems

Notes Efficiency Variance = (Standard inputs allowed for actual outputs – Actual Inputs)
× Budgeted Rate
= 13,600 + 20,000 – (13,430 + 20,000)

= 170F
Spending Variance = Budget – Actual
= (13,430 + 20,000) – 34,450 [790 × 17 = 13430]
= 1,020 (A)

Variable from Flexible Budget: Flexible budget for actual output of 2000 i.e., 800 standard hours
= 20000 + 13600 = ` 33600
Total variances from flexible budget

= 34450 – 33600
= 850 (A)
which consists of Efficiency variance of 170 F and spending variance = 1020 (A)
Analysis of Factory – Overhead Variances:

(1) Actual costs (2) Flexible Budget (3) Flexible Budget: (4) Applied:
incurred Budget: Actual Budget: Std. Std. Inputs
Inputs Inputs allowed allowed for
× Budgeted Rate for Actual Actual Outputs
Outputs × × Budgeted
Budgeted Rate Rate
Option A-

Variable OH
Total given 790 × 17 800 × 17 800 × 17
` 14250 = 13430 = 13600 = 13600
– ` 820 A – ` 170 F – –

Spending Efficiency Never a
Variance Variance Variance
– ` 650 A –

Flexible Budget Variance
– ` 650 A –
Under Applied Variable Overhead

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