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24 May, 23:09

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:

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  1. 25 May, 01:01
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    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
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