Lenore Company makes clocks. The fixed overhead costs for 2019 total $880,000. The company uses direct labor-hours for fixed overhead allocation and anticipates 220,000 hours during the year for 330,000 units. An equal number of units are budgeted for each month. During June, 32,000 clocks were produced and $72,000 was spent on fixed overhead. a. Determine the fixed overhead rate for 2019 based on units of input. b. Determine the fixed overhead budget variance for June. C. Determine the production-volume overhead variance for June.
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.
Question 3.
Lenore Company makes clocks. The fixed
a. Determine the fixed overhead rate for 2019 based on units of input.
b. Determine the fixed overhead
C. Determine the production-volume overhead variance for June.
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