Caroline, Inc. planned to produce 20,000 units of product and work 100,000 direct labor hours in 2016. Manufacturing overhead at the 100,000 direct labor hours level of activity was estimated to be: Variable manufacturing overhead $ 700,000 Fixed manufacturing overhead 300,000 ------------- Total manufacturing overhead $1,000,000 At the end of 2016, 19,000 units of product were actually produced and 98,000 actual direct labor hours were worked. Total actual overhead costs for 2016 were $935,000. Instructions (a) Compute the total overhead variance. (b) Compute the overhead controllable variance. (c) Compute the overhead volume variance
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.
Caroline, Inc. planned to produce 20,000 units of product and work 100,000 direct labor hours in 2016. Manufacturing
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 3 images
