Compute a predetermined manufacturing overhead rate and use it. If the company allocates overhead based on direct labor cost, what are the total actual manufacturing overhead costs? Estimated manufacturing overhead 243,750 Estimated labor hours 35,000 Actual direct labor hours 36,000 Estimated direct labor cost $325,000 Actual direct labor cost $320,000 Factory depreciation $66,000 Factory utilities $30,400 Indirect labor $22,700 Sales Commission $54,700 Factory rent $47,800 Factory property taxes $28,100 Indirect materials $33,400
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.
Compute a predetermined manufacturing
| Estimated manufacturing overhead | 243,750 |
| Estimated labor hours | 35,000 |
| Actual direct labor hours | 36,000 |
| Estimated direct labor cost | $325,000 |
| Actual direct labor cost | $320,000 |
| Factory |
$66,000 |
| Factory utilities | $30,400 |
| Indirect labor | $22,700 |
| Sales Commission | $54,700 |
| Factory rent | $47,800 |
| Factory property taxes | $28,100 |
| Indirect materials | $33,400 |
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