Cullumber Company applies manufacturing overhead to jobs on the basis of machine hours used. Manufacturing overhead costs are estimated to total $2,304,000 for the current year and machine usage is estimated at 200,000 hours. In January, $238,080 of overhead costs are incurred and 22,000 machine hours are used. For the remainder of the year, $2,483,200 of additional overhead costs are incurred and 214,000 additional machine hours are worked.
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.
calculate the manufacturing
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