Black Company uses predetermined overhead rates to apply manufacturing overheads to jobs. The predetermined overhead rates are based on machine hours in Department A and direct labour cost in Department B. At the beginning of the year, the company made the following estimates: A B Manufacturing overhead 25,000 30,000 Direct Labour hrs 16,000 12,000 Machine hrs 5,000 10,000 Direct labour cost 20,000 50,000 What predetermined overhead rates would be used in Departments A and B respectively? Select one: a. $5.00 and $2.00 b. $5.00 and 200% c. $8.00 and 50% d. 110% and $15
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.
Black Company uses predetermined overhead rates to apply manufacturing
A B
Manufacturing overhead 25,000 30,000
Direct Labour hrs 16,000 12,000
Machine hrs 5,000 10,000
Direct labour cost 20,000 50,000
What predetermined overhead rates would be used in Departments A and B respectively?
$5.00 and $2.00
$5.00 and 200%
$8.00 and 50%
110% and $15
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
