Whitley has recently completed work for three clients: Harrison, Barnes, and Tyler. The cost data for each of the three jobs are summarized below: Job Direct Materials Direct Labor Hours Direct Labor Cost Harrison $ 6,843 65 $ 15,559 Barnes 13,319 80 22,916 Tyler 43,106 135 50,386 Budgeted direct materials cost and direct labor cost for the year are estimated at $480,000 and $660,000, respectively. Direct labor hours are budgeted at 25,500 hours, and total overhead is budgeted at $637,500. Required: 1. Calculate the total cost of each of the three jobs. 2. Suppose that for the entire year, Whitley used 26,800 labor hours and total actual overhead was $674,000. What is the amount of underapplied or overapplied overhead?
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.
Whitley has recently completed work for three clients: Harrison, Barnes, and Tyler. The cost data for each of the three jobs are summarized below:
| Job | Direct Materials | Direct Labor Hours | Direct Labor Cost | ||||||
| Harrison | $ | 6,843 | 65 | $ | 15,559 | ||||
| Barnes | 13,319 | 80 | 22,916 | ||||||
| Tyler | 43,106 | 135 | 50,386 | ||||||
Budgeted direct materials cost and direct labor cost for the year are estimated at $480,000 and $660,000, respectively. Direct labor hours are budgeted at 25,500 hours, and total overhead is budgeted at $637,500.
Required:
1. Calculate the total cost of each of the three jobs.
2. Suppose that for the entire year, Whitley used 26,800 labor hours and total actual overhead was $674,000. What is the amount of underapplied or overapplied overhead?
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