A major weakness of static budgets is that:

Roma Restaurant compares monthly operating results with a static budget prepared at the beginning of the year. When actual sales are less than budget, would the restaurant usually report favorable variances on fixed supervisory salaries and variable food costs?

Supervisory Salaries/Food Costs

A company's static budget estimate of total overhead costs was $200,000 based on the assumption that 20,000 units would be produced and sold. The company estimates that 30% of its overhead is variable and the remainder is fixed. What would be the total overhead cost according to the flexible budget if 24,000 units were produced and sold?

The higher the estimated total units in the base for the predetermined overhead rate (i.e., the denominator activity):

The two variances that can be computed for fixed overhead are the:

Which of the following variances is caused by a difference between the denominator activity in the predetermined overhead rate and the standard hours allowed for the actual production of the period?

The Firenze Company applies manufacturing overhead costs to products on the basis of direct labor-hours. The standard cost card shows that 6 direct labor-hours are required per unit of product. For August, the company budgeted to work 180,000 direct labor-hours and to incur the following total manufacturing overhead costs:

During August, the company completed 28,000 units of product, worked 172,000 direct labor-hours, and incurred the following total manufacturing overhead costs:

The denominator activity in the predetermined overhead rate is 180,000 direct labor-hours. The variable overhead spending variance for August is:

The Firenze Company applies manufacturing overhead costs to products on the basis of direct labor-hours. The standard cost card shows that 6 direct labor-hours are required per unit of product. For August, the company budgeted to work 180,000 direct labor-hours and to incur the following total manufacturing overhead costs:

During August, the company completed 28,000 units of product, worked 172,000 direct labor-hours, and incurred the following total manufacturing overhead costs:

The denominator activity in the predetermined overhead rate is 180,000 direct labor-hours. (Note that this is the same data that was provided for the previous question.) The variable overhead efficiency variance for August is:

The Firenze Company applies manufacturing overhead costs to products on the basis of direct labor-hours. The standard cost card shows that 6 direct labor-hours are required per unit of product. For August, the company budgeted to work 180,000 direct labor-hours and to incur the following total manufacturing overhead costs:

During August, the company completed 28,000 units of product, worked 172,000 direct labor-hours, and incurred the following total manufacturing overhead costs:

The denominator activity in the predetermined overhead rate is 180,000 direct labor-hours. (Note that this is the same data that was provided for the previous question.) The fixed overhead budget variance for August is:

The Firenze Company applies manufacturing overhead costs to products on the basis of direct labor-hours. The standard cost card shows that 6 direct labor-hours are required per unit of product. For August, the company budgeted to work 180,000 direct labor-hours and to incur the following total manufacturing overhead costs:

During August, the company completed 28,000 units of product, worked 172,000 direct labor-hours, and incurred the following total manufacturing overhead costs:

The denominator activity in the predetermined overhead rate is 180,000 direct labor-hours. (Note that this is the same data that was provided for the previous question.) The fixed overhead volume variance for August is: