Use the following information to answer Questions 9 through 13. Urbana Company calculates its predetermined manufacturing overhead rates using normal capacity, which is 288,000 units. The standard cost system allows 2 direct labor hours per unit produced. Manufacturing overhead is applied using direct labor hours. The total budgeted manufacturing overhead is $3,168,000, of which $864,000 is fixed manufacturing overhead. The actual results for the year are as follows. URBANA COMPANY ACTUAL RESULTS FOR PRODUCTION FOR CURRENT YEAR 280,000 Units produced 570,000 Direct labor hours used 9.00 Direct labor actual rate per hour 2,320,000 Variable manufacturing overhead 872,000 Fixed manufacturing overhead Compute the company's fixed manufacturing 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.
Use the following information to answer Questions 9 through 13. Urbana Company calculates its predetermined manufacturing
URBANA COMPANY ACTUAL RESULTS FOR PRODUCTION FOR CURRENT YEAR
280,000 Units produced
570,000 Direct labor hours used
9.00 Direct labor actual rate per hour
2,320,000 Variable manufacturing overhead
872,000 Fixed manufacturing overhead
Compute the company's fixed manufacturing overhead volume variance
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