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 125,000 units per year. The total budgeted overhead at normal capacity is $812,500 comprised of $312,500 of variable costs and $500,000 of fixed costs. Crane applies overhead on the basis of direct labor hours. During the current year, Crane produced 88,200 putters, worked 87,700 direct labor hours, and incurred variable overhead costs of $273,325 and fixed overhead costs of $333,300. (a) Compute the predetermined variable overhead rate and the predetermined fixed overhead rate. (Round answers to 2 decimal places, e.g. 2.75.) Predetermined Overhead Rate $ Variable $ Fixed
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 125,000 units per year. The total budgeted overhead at normal capacity is $812,500 comprised of $312,500 of variable costs and $500,000 of fixed costs. Crane applies overhead on the basis of direct labor hours. During the current year, Crane produced 88,200 putters, worked 87,700 direct labor hours, and incurred variable overhead costs of $273,325 and fixed overhead costs of $333,300. (a) Compute the predetermined variable overhead rate and the predetermined fixed overhead rate. (Round answers to 2 decimal places, e.g. 2.75.) Predetermined Overhead Rate $ Variable $ Fixed
Chapter1: Financial Statements And Business Decisions
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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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Transcribed Image Text: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 125,000 units per year. The
total budgeted overhead at normal capacity is $812,500 comprised of $312,500 of variable costs and $500,000 of fixed costs. Crane
applies overhead on the basis of direct labor hours.
During the current year, Crane produced 88,200 putters, worked 87,700 direct labor hours, and incurred variable overhead costs of
$273,325 and fixed overhead costs of $333,300.
(a)
Compute the predetermined variable overhead rate and the predetermined fixed overhead rate. (Round answers to 2 decimal
places, e.g. 2.75.)
Predetermined Overhead Rate
Variable
Fixed
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