Actual overhead $512,000 Applied overhead: Work-in-process inventory $125,000 Finished goods inventory 170,000 Cost of goods sold 150,000 Total $445,000 Calculate the overhead variance for the year and close it to cost of goods sold. Provide all the details and working outs.
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.
Jimmy Author Company has the following data for the past year:
Actual
$512,000
Applied overhead:
Work-in-process inventory
$125,000
Finished goods inventory
170,000
Cost of goods sold
150,000
Total
$445,000
Calculate the overhead variance for the year and close it to cost of goods sold. Provide all the details and working outs.
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