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1 Q1: A financial department of a company has arrived at the following Cost and Revenue function
1
Q1: A financial department of a company has arrived at the following Cost and Revenue function. R(x)= x (331.8-17.5x) C(x)=546+ 68.95x Both have domain 1
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When preparing flexible budget, MAYAR Corporation has the following information available for variable overhead costs. Direct labor hours are the cost driver for variable overhead costs. Actual variable overhead costs $5,120 Standard variable overhead costs $3.00 per hour Actual direct labor hours 2,000 hours Standard direct labor hours per unit 3 hours Units produced 1,000 What is the variable overhead spending variance? Select one: a. $3,880 Favorable b. $880 Favorable c. $1,000 Unfavorable d. $3,880 Unfavorable
Expert Solution
1 At breakeven R(x) = C(x)
Rx) = x (331.8 - 17.5x)
C(x) = 546 + 68.95x
331.8x - 17.5x^2 - 546 - 68.95 x = 0
262.85x - 17.5x^2 - 546 = 0
- 17.5x^2 + 262.85x - 546
-x^2 + 15.02 - 31.2
x1 = 2.49; x2 = 12.53
The break even point will be at 2.49 or 12.53
2) Maximum quantity to be sold (2.49 + 12.53) / 2 = 7.51 or 8 units
2
Variable overhead spending Variance =
Standard varable overhead cost - Actual variable overhead cost =
(1000 x 3 x 3 ) - 5120 = 3880
3880 Favorable
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