Columbo Corporation has two production departments, Forming and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Forming Department's predetermined overhead rate is based on machine-hours and the Finishing Department's predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates: Forming Finishing Machine-hours 17,000 10,000 Direct labor-hours 1,000 9,000 Total fixed manufacturing overhead cost $ 110,500 $ 78,300 Variable manufacturing overhead per machine-hour $ 1.60 Variable manufacturing overhead per machine-hour $ 3.30 During the current month the company started and finished Job A948. The following data were recorded for this job: Job A948: Forming Finishing Machine-hours 70 30 Direct labor-hours 10 50 Direct materials $ 650 $ 330 Direct labor cost $ 380 $ 1,900 If the company marks up its manufacturing costs by 40% then the selling price for Job A948 would be closest to:
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.
Columbo Corporation has two production departments, Forming and Finishing. The company uses a
| Forming | Finishing | |||
| Machine-hours | 17,000 | 10,000 | ||
| Direct labor-hours | 1,000 | 9,000 | ||
| Total fixed manufacturing overhead cost | $ | 110,500 | $ | 78,300 |
| Variable manufacturing overhead per machine-hour | $ | 1.60 | ||
| Variable manufacturing overhead per machine-hour | $ | 3.30 |
During the current month the company started and finished Job A948. The following data were recorded for this job:
| Job A948: | Forming | Finishing | ||
| Machine-hours | 70 | 30 | ||
| Direct labor-hours | 10 | 50 | ||
| Direct materials | $ | 650 | $ | 330 |
| Direct labor cost | $ | 380 | $ | 1,900 |
If the company marks up its
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