. Best Around, Inc., is a manufacturer of vacuums and uses standard costing. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of budgeted machine-hours. In 2017, budgeted fixed manufacturing overhead cost was $17,000,000. Budgeted variable manufacturing overhead was $10 per machine-hour. The denominator level was 1,000,000 machine-hours. Q. Prepare a graph for fixed manufacturing overhead. The graph should display how Best Around, Inc.’s fixed manufacturing overhead costs will be depicted for the purposes of (a) planning and control and (b) inventory costing.
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.
. Best Around, Inc., is a manufacturer of vacuums and uses
Q. Prepare a graph for fixed manufacturing overhead. The graph should display how Best Around, Inc.’s fixed manufacturing overhead costs will be depicted for the purposes of (a) planning and control and (b) inventory costing.
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