Ayayal Company produces one product, a putter called GO-Putter. Ayayal uses a standard cost system and determines that it should take one hour of direct labor to produce one GO-Putter. The normal production capacity for this putter is 80.000 units per year The total budgeted overhead at normal capacity is $696,000 comprised of $208,000 of variable costs and $488.000 of feed costs. Ayayal applies overhead on the basis of direct labor hours During the current year, Ayayal produced 76,000 putters, worked 75.200 direct labor hours, and incurred variable overhead costs of $204,800 and fixed overhead costs of $480,000.
Ayayal Company produces one product, a putter called GO-Putter. Ayayal uses a standard cost system and determines that it should take one hour of direct labor to produce one GO-Putter. The normal production capacity for this putter is 80.000 units per year The total budgeted overhead at normal capacity is $696,000 comprised of $208,000 of variable costs and $488.000 of feed costs. Ayayal applies overhead on the basis of direct labor hours During the current year, Ayayal produced 76,000 putters, worked 75.200 direct labor hours, and incurred variable overhead costs of $204,800 and fixed overhead costs of $480,000.
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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Compute the applied overhead for Ayayal for the year
Overhead Applied $
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Transcribed Image Text:Ayayal Company produces one product, a putter called GO-Putter. Ayayai uses a standard cost system and determines that it should
take one hour of direct labor to produce one GO-Putter. The normal production capacity for this putter is 80.000 units per year The
total budgeted overhead at normal capacity is $696,000 comprised of $208,000 of variable costs and $488,000 of fixed costs. Avayal
applies overhead on the basis of direct labor hours.
During the current year, Ayayal produced 76,000 putters, worked 75.200 direct labor hours, and incurred variable overhead costs of
$204,800 and fixed overhead costs of $480,000.
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