Hamilton Pty Ltd uses a standard costing system for product costing. The company uses direct labour hours as the cost driver to apply overhead costs. The budgeted data indicates planned production of 50,000 units using 200,000 direct labour hours and fixed overhead of $600,000. The accountant provides the actual results of 48,000 units produced using 195,000 direct labour hours incurring fixed overhead of $610,000. What was the fixed overhead volume variance?
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.
Hamilton Pty Ltd uses a
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