A company expected its annual overhead costs to be $1600000 and direct labor costs to be $1000000. Actual overhead was $1550000, and actual labor costs totaled $1100000. How much is the company’s predetermined overhead rate to the nearest cent? $1.45 $1.41 $1.60 $1.55
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 expected its annual
Predetermined Overhead Rate = Expected Annual Costs / Expected Direct Labour Costs
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