Bernon Corporation is using a predetermined overhead rate that was based on estimated tota manufacturing overhead of $492,000 and 30,000 machine-hours for the period. The company actual total fixed manufacturing overhead of $517,000 and 28,300 total machine-hours during period. The amount of manufacturing overhead that would have been applied to all jobs during period is closest to: O $492,000 O $487,703 O $464,120
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.
Manufacturing overhead costs are the sum of all indirect costs incurred during the manufacturing process. It is incorporated into the final product price, along with direct material and direct labor costs. Overhead costs in manufacturing typically include equipment depreciation, salary and wages paid to factory employees, and electricity used to power the equipment. According to GAAP, manufacturing overhead should be included in the cost of finished goods in inventory and work in progress inventory on a manufacturer's balance sheet as well as the cost of goods income statement (generally accepted accounting principles).
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