Coop's Stoops estimated its annual overhead to be $72,000 and based its predetermined overhead rate on 24,000 direct labor hours. At the end of the year, actual overhead was $77,190 and the total direct labor hours were 23,830. What is the entry to dispose of the overapplied or underapplied overhead? If an amount box does not require an entry, leave it blank. Cost of Goods Sold 8 Manufacturing Overhead X X
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.
Predetermined Overhead Rate :— It is the rate used to allocate manufacturing overhead to cost object.
It is calculated by dividing total estimated overhead cost by estimated usage of cost allocation base.
Under-applied Overhead :— It occurs when actual overhead cost is greater than applied overhead costs.
Over-applied Overhead:— It occurs when actual overhead is less than applied overhead costs.
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