Crane Company produces one product, a putter called GO-Putter, Crane uses a standard cost system and determines that it should take one hour of direct labor to produce one GO-Putter. The normal production capacity for this putter is 100,000 units per year. The total budgeted overhead at normal capacity is $650,000 comprised of $250,000 of variable costs and $400,000 of fixed costs. Crane applies overhead on the basis of direct labor hours.
Crane Company produces one product, a putter called GO-Putter, Crane uses a standard cost system and determines that it should take one hour of direct labor to produce one GO-Putter. The normal production capacity for this putter is 100,000 units per year. The total budgeted overhead at normal capacity is $650,000 comprised of $250,000 of variable costs and $400,000 of fixed costs. Crane applies overhead on the basis of direct labor hours.
Chapter4: Job Order Costing
Section: Chapter Questions
Problem 8PA: Coops Stoops estimated its annual overhead to be $85,000 and based its predetermined overhead rate...
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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.
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