andall Company manufactures products to customer specifications. A job costing system is used to accumulate production costs. Factory overhead cost was applied at 120% of direct labor cost. Selected data concerning the past year's operation of the company are presented below. January 1 December 31 Direct materials $ 86,000 $ 49,000 Work in process 75,000 51,000 Finished goods 124,000 109,000 Other information Direct materials purchases $ 333,000 Cost of goods available for sale 980,000 Actual factory overhead costs 269,000 The amount of underapplied or overapplied overhead is: Multiple Choice $59,000 overapplied. $59,000 underapplied. $17,000 overapplied. $17,000 underapplied. $0.
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.
andall Company manufactures products to customer specifications. A
| January 1 | December 31 | |||||
| Direct materials | $ | 86,000 | $ | 49,000 | ||
| Work in process | 75,000 | 51,000 | ||||
| Finished goods | 124,000 | 109,000 | ||||
| Other information | ||||||
| Direct materials purchases | $ | 333,000 | ||||
| Cost of goods available for sale | 980,000 | |||||
| Actual factory overhead costs | 269,000 | |||||
The amount of underapplied or overapplied overhead is:
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$59,000 overapplied.
-
$59,000 underapplied.
-
$17,000 overapplied.
-
$17,000 underapplied.
-
$0.
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