Baldwin Printing Company uses a job order cost system and applies overhead based on machine hours. A total of 150,000 machine hours have been budgeted for the year. During the year, an order for 1,000 units was completed and incurred the following: Direct material costs $1,000 Direct labor costs $1,500 Actual overhead $1,980 Machine hours 450 The accountant computed the inventory cost of this order to be $4.30 per unit. The annual budgeted overhead in dollars was: a. $577,500. b. $600,000. c. $645,000. d. $660,000.
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.
Baldwin Printing Company uses a
year, an order for 1,000 units was completed and incurred the following:
Direct material costs $1,000
Direct labor costs $1,500
Actual overhead $1,980
Machine hours 450
The accountant computed the inventory cost of this order to be $4.30 per unit. The annual
budgeted overhead in dollars was:
a. $577,500.
b. $600,000.
c. $645,000.
d. $660,000.
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