A company's manufacturing overhead is 60% of its total conversion costs. If direct labor is $41,000 and if direct mate manufacturing overhead is: Multiple Choice $24,600 $61,500 $65,600 $16,800
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.
The direct costs such as direct materials and direct labor are included in the prime cost. The direct labor and manufacturing overhead cost are included in the conversion costs.
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