Bobby Pte Ltd charges manufacturing overhead to products by using a pre-determined overhead rate, computed on the basis of labour hours. The following data pertain to the current year: Budgeted manufacturing overhead $480,000 Actual manufacturing overhead $440,000 Budgeted labour hours 20,000 Actual labour hours 16,000 How much is overhead over-applied or under-applied, stating clearly whether it is over or under applied.
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.
Bobby Pte Ltd charges manufacturing
overhead rate, computed on the basis of labour hours. The following data pertain to the
current year:
Budgeted manufacturing overhead $480,000
Actual manufacturing overhead $440,000
Budgeted labour hours 20,000
Actual labour hours 16,000
How much is overhead over-applied or under-applied, stating clearly whether it is over or
under applied.
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