Budgeted labour hours 8,500 Budgeted overheads £148,750 Actual labour hours 7,928 Actual overheads £146,200 The labour hour overhead absorption rate for the period was: (A) £17.20 per hour (B) £17.50 per hour (C) £18.44 per hour (D) £18.76 per hour Overheads during the period were: (A) Under-absorbed by £2,550 (B) Over-absorbed by £2,529 (C) Over-absorbed by £2,550 (D) Under-absorbed by £7,460
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.
Budgeted labour hours 8,500
Budgeted
Actual labour hours 7,928
Actual overheads £146,200
The labour hour overhead absorption rate for the period was:
(A) £17.20 per hour
(B) £17.50 per hour
(C) £18.44 per hour
(D) £18.76 per hour
Overheads during the period were:
(A) Under-absorbed by £2,550
(B) Over-absorbed by £2,529
(C) Over-absorbed by £2,550
(D) Under-absorbed by £7,460
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