Fixed Overhead Actual Fixed Overhead Applied to Work in Process Budgeted Fixed Overhead $198,700 hours x $ ?_ per hour = $_? Budget variance, $ _? Volume variance, $10,000 U (2) Standard Price (1) Standard Standard Quantity or Hours Cost (1) x (2) or Rate $6.00 per yard $15.50 per hour $5.00 per hour $ 18 , Direct materials Direct labor Variable overhead Fixed overhead.... Total standard cost per unit 3 yards 4 hours 4 hours 62 4 hours $106
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.
Using Fixed
The
Manufacturing overhead is applied to production on the basis of standard direct labor-hours. During the year, the company worked 37,000 hours and manufactured 9,500 units of product. Selected data relating to the company’s fixed
Required:
1. What were the standard hours allowed for the year’s production?
2. What was the amount of budgeted fixed overhead cost for the year?
3. What was the fixed overhead
4. What denominator activity level did the company use in setting the predetermined overhead rate for the year?
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