Beans Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $162,000, variable manufacturing overhead of $2.80 per direct labor-hour, and 60,000 direct labor-hours. Recently, Job K818 was completed with the following characteristics: Number of units in the job 10 Total direct labor-hours 50 Direct materials $ 920 Direct labor cost $ 1,400 The amount of overhead applied to Job K818 is closest to A. $135 B. $140 C. $415 D. $275
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.
Beans Corporation uses a
| Number of units in the job | 10 |
|---|---|
| Total direct labor-hours | 50 |
| Direct materials | $ 920 |
| Direct labor cost | $ 1,400 |
The amount of overhead applied to Job K818 is closest to
A. $135
B. $140
C. $415
D. $275
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