A company allocates overhead at a rate of 160% of direct labor cost. Actual overhead cost for the current pe s $1,140,000, and direct labor cost is $540,000. Determine whether there is over- or underapplied overhead using the T-account below. Factory 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.
Factory Overheads Also Known As Manufacturing Overheads. This Costs Are Incurred In The Production
Over Or Under Applied Manufacturing Overhead Is The Difference Between Actual Overhead Or Overhead Applied.
If Actual Overhead Is More Than Overapplied , The Difference Is Known As Underapplied Overhead
If Actual Overhead Is Less Than Overapplied , The Difference Is Known As Overapplied Overhead
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