Berlin Ltd. uses a combined overhead rate of $2.90 per machine hour to apply overhead to products. The rate was developed at an annual expected capacity of 264,000 machine hours; each unit of product requires two machine hours to produce. At 264,000 machine hours, expected fixed overhead for Munich Ltd. Is $250,800. During November, the company produced 11,960 units and used 24,700 machine hours. Actual variable overhead for the month was $47,100 and fixed overhead was $20,000. Calculate the overhead spending, efficiency, and volume variances for November. Note: Do not use negative signs with your answers.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Three OH variances
Berlin Ltd. uses a combined
During November, the company produced 11,960 units and used 24,700 machine hours. Actual variable overhead for the month was $47,100 and fixed overhead was $20,000. Calculate the overhead spending, efficiency, and volume variances for November.
Note: Do not use negative signs with your answers.
| OH Spending Variance | |||||
|---|---|---|---|---|---|
| Actual OH | - | Budget at Actual | = | OH Spending Variance | |
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| OH Efficiency Variance | |||||
|---|---|---|---|---|---|
| Budget at Actual | - | Budget at Standard | = | OH Efficiency Variance | |
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| Volume Variance | |||||
|---|---|---|---|---|---|
| Budget at Standard | - | Applied OH | = | Volume Variance | |
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