John Associates produces carburetors for small engines and uses a normal costing system. The following data are available for 2019. Budgeted: Overhead $4,500,000 Machine hours 187,500 Direct labor hours 600,000 Actual: Unit produced 750,000 Overhead $ 4,466,250 Prime cost $6,750,000 Machine hours 187,875 Direct labor hours 585,000 Overhead is applied based on direct labor hours. Required 1) What is the predetermined overhead rate? 2) What is the applied overhead for 2019? 3) Was overhead overapplied or underapplied and by how much?

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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.