The effect of revenue on the fundamental accounting equation is ...

[nmorano1]

The effect of revenue on the fundamental accounting equation is a(n)
 a. increase to liabilities.
  b. decrease to owner's equity.
  c. increase to owner's equity.
  d. decrease to assets.

Question 2

Identifying favorable and unfavorable variances.
 
  Purdue, Inc., manufactures tires for large auto companies. It uses standard costing and allocates variable and fixed manufacturing overhead based on machine-hours. For each independent scenario given, indicate whether each of the manufacturing variances will be favorable or unfavorable or, in case of insufficient information, indicate CBD (cannot be determined).

[Jossy]

Answer to Question 1

C

Answer to Question 2

Scenario VOH
Spending Variance VOH
Efficiency
Variance FOH
Spending Variance FOH
Production-Volume Variance
Production output is 6 less than budgeted, and actual fixed manufacturing overhead costs are 5 more than budgeted. Cannot be determined; no information on actual versus budgeted VOH rates. Cannot be determined; no information on actual versus flexible-budget machine-hours. Unfavorable:;actual fixed costs are more than budgeted fixed costs. Unfavorable; output is less than budgeted causing FOH costs to be underallocated.
Production output is 13 less than budgeted; actual machine-hours are 7 more than budgeted. Cannot be determined; no information on actual versus budgeted VOH rates. Unfavorable; actual machine-hours more than flexible-budget machine-hours. Cannot be determined; no information on actual versus budgeted FOH costs. Unfavorable; output is less than budgeted causing FOH costs to be underallocated.
Production output is 10 more than budgeted. Cannot be determined; no information on actual versus budgeted VOH rates. Cannot be determined; no information on actual machine-hours versus flexible-budget machine-hours. Cannot be determined; no information on actual versus budgeted FOH costs. Favorable; output more than budgeted will cause FOH costs to be overallocated.
Actual machine-hours are 20 less than flexible-budget machine-hours. Cannot be determined; no information on actual versus budgeted VOH rates. Favorable; less machine-hours used relative to flexible budget. Cannot be determined; no information on actual versus budgeted FOH costs. Cannot be determined; no information on flexible-budget machine-hours relative to static-budget machine-hours.
Relative to the flexible budget, actual machine-hours are 15 less, and actual variable manufacturing overhead costs are 20 greater. Unfavorable; actual VOH rate greater than budgeted VOH rate. Favorable; actual machine-hours less than flexible-budget machine-hours. Cannot be determined; no information on actual versus budgeted FOH costs. Cannot be determined; no information on actual output relative to budgeted output.

[nmorano1]

TYSM

[adf223]

Excellent