Budgeted Production Volume Direct Labor Hours per Unit Flutes 2000 units 2.0 Clarinets 1,500 3.0 Oboes 1,750 1.5
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.
Bach Instruments Inc. makes three musical instruments: flutes, clarinets, and oboes. The budgeted
a. Determine the single plant wide overhead rate.
b. Use the overhead rate in (a) to determine the amount of total and per-unit
overhead allocated to each of the three products, rounded to the nearest dollar
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