The Managerial Accountant at Sailboat World Compiles a Monthly Overhead

question 64

Short Answer

The managerial accountant at Sailboat World compiles a monthly overhead variance report. The company produced 30,584 sailboats in the past month at 0.28 machine hours per unit. The budgeted fixed overhead cost was $95,000 whereas actual fixed overhead cost was $96,400. Calculate the standard fixed overhead cost allocated to production at $11 per machine-hour. Compute the fixed overhead volume variance and the fixed overhead budget variance.

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Definitions:

Summer Season

The warmest season of the year, typically occurring between spring and autumn in temperate regions, and often associated with outdoor activities and vacations.

Push Strategy

A marketing strategy where businesses push their products to be seen by consumers, typically through distribution channels, to increase demand.

Economies of Scale

The cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.

Cost Reduction

Strategic efforts by businesses to decrease expenses and improve efficiency, often to enhance profitability.