Acme Company uses a standard cost accounting system and applies variable manufacturing overhead at a rate of $12 per direct labor hour. The standard hours allowed per unit of finished goods is 2 hours and Acme produced 10,500 units of finished goods during the year. The variable manufacturing overhead spending variance is $13,500 favorable and the variable manufacturing overhead rate variance is $5,100 favorable. What is the actual number of direct labor hours worked during the year? O 20,300 hours O 20,575 hours O 21,700 hours O 21,425
Acme Company uses a standard cost accounting system and applies variable manufacturing overhead at a rate of $12 per direct labor hour. The standard hours allowed per unit of finished goods is 2 hours and Acme produced 10,500 units of finished goods during the year. The variable manufacturing overhead spending variance is $13,500 favorable and the variable manufacturing overhead rate variance is $5,100 favorable. What is the actual number of direct labor hours worked during the year? O 20,300 hours O 20,575 hours O 21,700 hours O 21,425
Chapter1: Financial Statements And Business Decisions
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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.
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Transcribed Image Text:Acme Company uses a standard
cost accounting system and applies
variable manufacturing overhead at
a rate of $12 per direct labor hour.
The standard hours allowed per unit
of finished goods is 2 hours and
Acme produced 10,500 units of
finished goods during the year. The
variable manufacturing overhead
spending variance is $13,500
favorable and the variable
manufacturing overhead rate
variance is $5,100 favorable. What is
the actual number of direct labor
hours worked during the year? O
20,300 hours O 20,575 hours O
21,700 hours O 21,425
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