A company estimated the manufacturing overhead costs for the coming year at $420,000. The total estimated direct labor hours are 15,000 hours, and the estimated machine hours to be worked are 6,000 hours. The company allocates its manufacturing overhead costs based on the direct labor hours. What is the pre-determined overhead allocation rate?
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.
A company estimated the
Step by step
Solved in 2 steps
