dutchess company used a predetermined overhead rate this year of $1.90 per direct labor hour, based on an estimate of 20,000 direct labor hours to be worked during the year. Actual costs and activity during the year were: Actual manufacturing overhead cost incurred $38,000 Actual direct labor hours worked 20,500 The underapplied or overapplied overhead for the year was: $950 underapplied $950 overapplied $2,850 underapplied $2,850 overapplied None of the above Please show work.
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.
dutchess company used a predetermined
| Actual |
$38,000 |
| Actual direct labor hours worked | 20,500 |
The underapplied or overapplied overhead for the year was:
$950 underapplied
$950 overapplied
$2,850 underapplied
$2,850 overapplied
None of the above
Please show work.
Overhead applied = Actual direct labor hours worked x Predetermined overhead rate
= 20,500 hours x $1.90 per direct labor hour
= $38,950
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