Determine the flexible-budget amount for equipment

Question

Flexible Budget and Variances for Depreciation Somson SuperKlean Service's master budget includes $258,000 for equipment depreciation. The master budget was prepared for an annual vol- ume of 103,200 chargeable hours. This volume is expected to occur uniformly throughout the year. During September, Somson performed 8,170 chargeable hours, and the firm recorded $20,500 of depreciation expense.

Required

1. Determine the flexible-budget amount for equipment depreciation in September.

2. Compute the spending variance for the depreciation expense on equipment.

3. Calculate the production-volume variance for the depreciation expense. What is the interpretation of this variance?

4. List possible reasons for the spending variance.

Answer 1

By showing the complete procedural part, solve the following financial accounting numerical problem regarding Flexible Budget and Variances for Depreciation. Somson SuperKlean Service's master budget comprises $258,000 for equipment depreciation. The master budget was made for a yearly volume of 103,200 chargeable hours. This volume is predicted to take place uniformly all through the year. Throughout September, Somson performed 8,170 chargeable hours, and the firm recorded $20,500 of depreciation expenditure. Problem 1: Find out the flexible-budget amount for equipment depreciation in the month September. Problem 2: Calculate the spending variance for the depreciation expenditure on equipment. Problem 3: Compute the production-volume variance for the depreciation expense. Determine the interpretation of this variance? Problem 4: List all possible reasons for spending the variance.