McAllister Company's Master Budget for the Year Just Completed Was

question 62

Essay

McAllister Company's master budget for the year just completed was based on 100% capacity and included 40,000 machine hours and $240,000 total factory overhead. Budgeted fixed overhead at 75% of factory capacity would be $160,000 (and 30,000 machine hours). The company operated at 90% capacity for the year, and incurred $252,000 total factory overhead cost.

Required:
1. Determine the total overhead flexible-budget variance (to the nearest whole dollar) for the year. Show calculations.
2. Calculate the fixed overhead production-volume variance (to the nearest whole dollar) for the year. Show calculations.

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Definitions:

Intrinsic Motivation

Motivation driven by an interest or enjoyment in the task itself, and exists within the individual rather than relying on any external pressure.

Need for Competence

An individual's innate desire to be effective in dealing with the environment, feeling capable, and skilled.

Need for Self-Determination

The intrinsic motivation to be autonomous and in control of one’s own life, influencing behavior and psychological well-being.

Intrinsically Motivated

A type of motivation driven by an interest or enjoyment in the task itself, rather than relying on external pressures or rewards.