Claybrooks Corporation has two manufacturing departments--Casting and Assembly. The company used the following data at the beginning of the year to calculate predetermined overhead rates: Casting Assembly Total Estimated total machine-hours (MHs) 3,000 2,000 5,000 Estimated total fixed manufacturing overhead cost $ 17,700 $ 5,800 $ 23,500 Estimated variable manufacturing overhead cost per MH $ 1.50 $ 2.20 Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. That predetermined manufacturing overhead rate is closest to: $7.40 $3.70 $6.48 $4.70
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.
Claybrooks Corporation has two manufacturing departments--Casting and Assembly. The company used the following data at the beginning of the year to calculate predetermined
Casting Assembly Total
Estimated total machine-hours (MHs) 3,000 2,000 5,000
Estimated total fixed
Estimated variable manufacturing overhead cost per MH $ 1.50 $ 2.20 Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. That predetermined manufacturing overhead rate is closest to:
$7.40
$3.70
$6.48
$4.70
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