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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.
4. Prepare the factory
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For the right columns you are required to add numbers. Please follow the exact format provided in the photos. Thank you !
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Black Diamond Company produces snowboards. Each snowboard requires 2 pounds of carbon fiber.
Management reports that 6,400 snowboards and 7,400 pounds of carbon fiber are in inventory at the
beginning of the third quarter, and that 164,000 snowboards are budgeted to be sold during the third
quarter. Management wants to end the third quarter with 4,900 snowboards and 5,400 pounds of carbon
fiber in inventory. Carbon fiber costs $13 per pound. Each snowboard requires 0.5 hour of direct labor at
$18 per hour. Variable overhead is budgeted at the rate of $8 per direct labor hour. The company
budgets fixed overhead of $1,796,000 for the quarter.
4. Prepare the factory overhead budget for the third quarter.
BLACK DIAMOND COMPANY
Factory Overhead Budget
Third Quarter
Direct labor hours needed
Budgeted variable overhead
Budgeted total factory overhead](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F98e87c1e-d790-489b-a066-bf9d39e643de%2F2620208b-762a-476e-8135-21c627fb8e0a%2Fn3e3hgj_processed.jpeg&w=3840&q=75)
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