Drive Safe, Inc. a leading manufacturer of car spare parts, divided its manufacturing process into two Departments - Production and Packing. The estimated overhead costs for the Production and Packing departments amounted to $14,000,000 and $20,000,000, respectively. The company produces two types of parts - Part 1 and Part 2. The total estimated labor hours for the year were 40,000, and estimated machine hours were 35,000. The Production department is mechanized, whereas the Packing department is labor oriented. Calculate the amount of manufacturing overhead costs allocated to Part 1. Production Packing Machine hours Labor hours Part 1 10,000 30,000 Part 2 25,000 10,000 35,000 40,000
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.
Drive Safe, Inc. a leading manufacturer of car spare parts, divided its manufacturing process into two
Departments - Production and Packing. The estimated
departments amounted to $14,000,000 and $20,000,000, respectively. The company produces two types of parts - Part 1 and Part 2. The total estimated labor hours for the year were 40,000, and estimated machine hours were 35,000. The Production department is mechanized, whereas the Packing department is labor oriented. Calculate the amount of
Production Packing
Machine hours Labor hours
Part 1 10,000 30,000
Part 2 25,000 10,000
35,000 40,000
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
