Factory overhead variance is over absorbed P9,000. The factory overhead rate of P10 per labor hour was arrived at by using an estimated capacity of 20,000 labor hours. The fixed overhead rate is P3 per labor hour. With utilized capacity equal to 18,900 labor hours, how much factory overhead must have b
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.
Factory
With utilized capacity equal to 18,900 labor hours, how much factory overhead must have been incurred?
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