A company applies overhead using machine hours and shows the following information. Compute the variable overhead variance. Actual hours of machine use : 9,400 hours Standard hours of machine use (for actual production): 10,000 hours Actual variable overhead rate per machine hours : $4.15 Standard variable overhead rate per machine hour : $4.00 $2,490 F $990U $990 F $3,900F $3,900U
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.
A company applies
Actual hours of machine use : 9,400 hours
Standard hours of machine use (for actual production): 10,000 hours
Actual variable overhead rate per machine hours :
$4.15
Standard variable overhead rate per machine hour :
$4.00
$2,490 F
$990U
$990 F
$3,900F
$3,900U
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