Question

Bannister Motors Corporation reported the following variances for the period just ended: Variable-overhead spending variance: $50,000U Variable-overhead efficiency variance: $28,000U Fixed-overhead budget variance: $70,000U Fixed-overhead volume variance: $30,000U If Bannister desires to analyze variances that arose primarily from managers' expenditures in excess of anticipated amounts, the company should focus on variances that total:

Answer 1

Answer:

Company should focus on variances that total is $120,000 U

Explanation:

Given:

Variable-overhead spending variance = $50,000 U

Variable-overhead efficiency variance = $28,000 U

Fixed-overhead budget variance = $70,000 U

Fixed-overhead volume variance = $30,000 U

Computation:

The company should pay initial attention to its expenses whether it is a fixed or variable expense.

Company should focus on variances = Variable-overhead spending variance + Fixed-overhead budget variance

Company should focus on variances = $50,000 U + $70,000 U

Company should focus on variances = $120,000 U