Abrams,Inc Required:
A

question 133

Essay

Abrams,Inc.provides the following results of March's operations:
$\begin{array}{lr}\text { Direct materials price variance } & \$ 400 \mathrm{~F} \\\text { Direct materials quantity variance } & 2,000 \mathrm{U} \\\text { Direct labor rate variance } & 100 \mathrm{U} \\\text { Direct labor efficiency variance } & 1,200 \mathrm{~F} \\\text { Variable overhead spending variance } & 400 \mathrm{U} \\\text { Variable overhead efficiency variance } & 800 \mathrm{~F} \\\text { Fixed overhead spending variance } & 100 \mathrm{U} \\\text { Fixed overhead volume variance } & 600 \mathrm{~F}\end{array}$

Required:
a.Determine the total overhead cost variance for March.
b.Applying the management by exception approach,which of the variances shown are of greatest concern? Why?
c.Assuming the variances are immaterial and we close them to Cost of Goods Sold,what will the effect be on that account of these variances?

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Definitions:

Interest Annually

A method where interest is calculated once every year and added to the principal sum, affecting the total amount of interest earned or paid over the life of the loan or investment.

Annual Rate

The interest rate over a year's time, often used in financial contexts to describe the yield of an investment or the cost of a loan.

Debt Payments

Money that is paid back to reduce or settle the amount borrowed, including both the principal and the interest.

Single Payment

A one-time transaction to settle a liability or complete a purchase.