Down Company uses a predetermined overhead rate based on direct labor hours to apply manufacturing overhead to jobs. Last year Down Company incurred P156,600 in actual manufacturing overhead cost. The Manufacturing Overhead account showed that overhead was underapplied by P12,600 for the year. If the predetermined overhead rate is P6.00 per direct labor hour, how many hours did the company work during the year? 26,000 hours 24,000 hours 28,200 hours 25.000 hour
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.
Down Company uses a predetermined
manufacturing overhead to jobs. Last year Down Company incurred P156,600 in actual
manufacturing overhead cost. The Manufacturing Overhead account showed that overhead was
underapplied by P12,600 for the year. If the predetermined overhead rate is P6.00 per direct labor
hour, how many hours did the company work during the year?
26,000 hours
24,000 hours
28,200 hours
25.000 hour
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