Calculating the Predetermined Overhead Rate, Applying Overhead to Production At the beginning of the year, Kester Company estimated the following: Kester uses normal costing and applies overhead on the basis of direct labor hours. For the month of March, direct labor hours were 7,400. Required: 1. Calculate the predetermined overhead rate for Kester. 2. Calculate the overhead applied to production in March.
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.
Calculating the Predetermined Overhead Rate, Applying Overhead to Production At the beginning of the year, Kester Company estimated the following:
Kester uses normal costing and applies overhead on the basis of direct labor hours. For the month of March, direct labor hours were 7,400.
Required:
1. Calculate the predetermined overhead rate for Kester.
2. Calculate the overhead applied to production in March.
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