Answered: egan, Incorporated uses the following…

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter10: Standard Costing And Variance Analysis

Section: Chapter Questions

Problem 58E: At the beginning of the year, Lopez Company had the following standard cost sheet for one of its...

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Megan, Incorporated uses the following standard costs per unit for one of its products: Direct labor (2.0 hours @ $5.00 per hour) = $10.00; overhead (2.0 hours @ $2.50 per hour) = $5.00. The flexible budget for overhead is $180,000 plus $1.00 per direct labor hour (DLH). Actual data for the past month show total overhead costs of $234,000, total fixed overhead of $140,000, 76,000 hours worked, and 60,000 units produced.

The variable overhead spending variance for the past month for Megan, Incorporated was:

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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