The following information relates to company XYZ. Manufacturing overheads: BWP Lighting & Heating 8 000 Administration employees 70 000 Employee accident insurance 1 200 Plant and Equipment Insurance 70 000 Plant and Equipment maintenance & repairs (minor) 20 000 Plant and Equipment maitenance & repairs (major) 200 000 Rent 25 000 Allocation by department Department A Department B Total Area occupied (sqm2) 1 200 2300 3 500 Depreciation 20 000 40 000 60 000 No. of employees 10 18 28 Book value 250 000 450 000 700 000 Maintenance hours 18 000 25 000 43 000 Indirect Materials 8 000 12 000 20 000 Indirect Labour 10 000 14 000 24 000 Allocate the manufacturing overheads by departments?
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
The following information relates to company XYZ.
Manufacturing
BWP
Lighting & Heating 8 000
Administration employees 70 000
Employee accident insurance 1 200
Plant and Equipment Insurance 70 000
Plant and Equipment maintenance & repairs (minor) 20 000
Plant and Equipment maitenance & repairs (major) 200 000
Rent 25 000
Allocation by department
Department A Department B Total
Area occupied (sqm2) 1 200 2300 3 500
Depreciation 20 000 40 000 60 000
No. of employees 10 18 28
Book value 250 000 450 000 700 000
Maintenance hours 18 000 25 000 43 000
Indirect Materials 8 000 12 000 20 000
Indirect Labour 10 000 14 000 24 000
Allocate the manufacturing overheads by departments?
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