Assume that a company uses a standard cost system and applies overhead to production based on direct labor-hours. It provided the following information for its most recent year: Total budgeted fixed overhead cost for the year $ 300,000 Actual fixed overhead cost for the year $ 276,000 Budgeted direct labor-hours 60,000 Actual direct labor-hours 56,000 Standard direct labor-hours allowed for the actual output 56,700 What is the fixed overhead applied to production during the period? Multiple Choice $283,500 $273,500 $278,500 $288,500
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.
Assume that a company uses a standard cost system and applies
| Total budgeted fixed overhead cost for the year | $ | 300,000 | |
| Actual fixed overhead cost for the year | $ | 276,000 | |
| Budgeted direct labor-hours | 60,000 | ||
| Actual direct labor-hours | 56,000 | ||
| Standard direct labor-hours allowed for the actual output | 56,700 | ||
What is the fixed overhead applied to production during the period?
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$283,500
-
$273,500
-
$278,500
-
$288,500
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