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:

Supermajority Shareholder Voting

A voting requirement that exceeds the threshold of a simple majority, often used for significant decisions in a corporation.

Hostile Takeover

An attempt by a company or individual to acquire another company against the wishes of the target company's management and board of directors.

Voting Trust

An arrangement where the shares of a company's stock are placed under the control of a trustee, often to consolidate voting power or to make unified decisions on behalf of the shareholders.

Directors

Individuals elected by shareholders to oversee the management of a corporation and make major decisions.