Elevator Co. makes two product models, A and B, and provides both installation and inspection services for its customers. Budgeted information is as follows: Installation Inspection Total Budgeted overhead 300,000 210,000 510,000 Budgeted labor hours 2,000 3,000 5,000 Product A Product B Total Direct labor hours per unit: 2.0 1.5 5,000 Installation 1.0 0.5 2,000 Inspection 1.0 1.0 3,000 Units 1,000 2,000 3,000 The company uses a departmental method to allocate overhead in each of the two cost pools - installation and inspection. How much overhead is allocated to product A if the company uses direct labor hours as the allocation base?
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.
Elevator Co. makes two product models, A and B, and provides both installation and inspection services for its customers. Budgeted information is as follows:
|
|
Installation |
Inspection |
Total |
|---|---|---|---|
|
Budgeted |
300,000 |
210,000 |
510,000 |
|
Budgeted labor hours |
2,000 |
3,000 |
5,000 |
|
|
Product A |
Product B |
Total |
|---|---|---|---|
|
Direct labor hours per unit: |
2.0 |
1.5 |
5,000 |
|
Installation |
1.0 |
0.5 |
2,000 |
|
Inspection |
1.0 |
1.0 |
3,000 |
|
Units |
1,000 |
2,000 |
3,000 |
The company uses a departmental method to allocate overhead in each of the two cost pools - installation and inspection. How much overhead is allocated to product A if the company uses direct labor hours as the allocation base?
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