Echenko Corporation uses a job-order costing system and applies overhead to jobs using a predetermined overhead rate. During the year the company's Finished Goods inventory account was debited for $380,000 and credited for $335,500. The ending balance in the Finished Goods inventory account was $62,300. At the end of the year, manufacturing overhead was overapplied by $2,900. If the applied manufacturing overhead was $70,400, the actual manufacturing overhead cost for the year was?
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.
Echenko Corporation uses a
If the applied manufacturing overhead was $70,400, the actual
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