A company’s ending inventory of finished goods has a total cost of $10,000 and consists of 500 units. If the overhead applied to these goods is $4,000 and the predetermined overhead rate is 80% of direct labor costs, how much direct materials cost was incurred in producing these 500 units? a. $10,000 d. $5,000 b. $6,000 e. $1,000 c. $4,000
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’s ending inventory of finished goods has a total
cost of $10,000 and consists of 500 units. If the
applied to these goods is $4,000 and the predetermined
overhead rate is 80% of direct labor costs, how much direct
materials cost was incurred in producing these 500 units?
a. $10,000 d. $5,000
b. $6,000 e. $1,000
c. $4,000
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