Flagler Company allocates overhead based on machine hours. It estimated overhead costs for the year to be $420,000. Estimated machine hours were 50,000. Actual hours and costs for the year were 46,000 machine hours and $380,000 of overhead. (a) Calculate the overhead application rate for the year.(b) What is the amount of applied overhead for the year?(c) What is the amount of under or overapplied overhead for the year? Indicate whether it is over or underapplied.
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) Calculate the overhead application rate for the year.
(b) What is the amount of applied overhead for the year?
(c) What is the amount of under or overapplied overhead for the year? Indicate whether it is over or underapplied.
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