A company uses a standard costing system and applies overhead to production based on direct labor-hours. It provided the following excerpt from standard cost card of its only product: Fixed Pre- determined Standard Hours Overhead Rate Standard Cost Fixed manufacturing overhead 2 hours $6.00 per hour $12.00 During the most recent period, the following additional information was available: • The total actual fixed overhead cost was $275,000. • The budgeted amount of fixed overhead cost was $285,000. 46,000 direct labor-hours were actually used to produce 24,060 units. How much was the fixed overhead volume variance? Multiple Choice $3,720 F $13,720 F
A company uses a standard costing system and applies overhead to production based on direct labor-hours. It provided the following excerpt from standard cost card of its only product: Fixed Pre- determined Standard Hours Overhead Rate Standard Cost Fixed manufacturing overhead 2 hours $6.00 per hour $12.00 During the most recent period, the following additional information was available: • The total actual fixed overhead cost was $275,000. • The budgeted amount of fixed overhead cost was $285,000. 46,000 direct labor-hours were actually used to produce 24,060 units. How much was the fixed overhead volume variance? Multiple Choice $3,720 F $13,720 F
Chapter8: Standard Costs And Variances
Section: Chapter Questions
Problem 12PA: ABC Inc. spent a total of $48,000 on factory overhead. Of this, $28,000 was fixed overhead. ABC Inc....
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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.
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