Fatzinger Corporation has two production departments, Milling and Assembly. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Milling Department's predetermined overhead rate is based on machine-hours and the Assembly Department's predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates: Milling Assembly Machine-hours 20,000 14,000 Direct labor-hours 2,000 7,000 Total fixed manufacturing overhead cost $ 132,000 $ 57,400 Variable manufacturing overhead per machine-hour $ 2.30 Variable manufacturing overhead per direct labor-hour $ 3.40 The predetermined overhead rate for the Assembly Department is closest to: $8.20 per direct labor-hour $11.60 per direct labor-hour $3.40 per direct labor-hour $4.06 per direct labor-hour
Fatzinger Corporation has two production departments, Milling and Assembly. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Milling Department's predetermined overhead rate is based on machine-hours and the Assembly Department's predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates: Milling Assembly Machine-hours 20,000 14,000 Direct labor-hours 2,000 7,000 Total fixed manufacturing overhead cost $ 132,000 $ 57,400 Variable manufacturing overhead per machine-hour $ 2.30 Variable manufacturing overhead per direct labor-hour $ 3.40 The predetermined overhead rate for the Assembly Department is closest to: $8.20 per direct labor-hour $11.60 per direct labor-hour $3.40 per direct labor-hour $4.06 per direct labor-hour
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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.
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Fatzinger Corporation has two production departments, Milling and Assembly. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Milling Department's predetermined overhead rate is based on machine-hours and the Assembly Department's predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates:
The predetermined overhead rate for the Assembly Department is closest to:
| Milling | Assembly | |||
| Machine-hours | 20,000 | 14,000 | ||
| Direct labor-hours | 2,000 | 7,000 | ||
| Total fixed |
$ | 132,000 | $ | 57,400 |
| Variable manufacturing overhead per machine-hour | $ | 2.30 | ||
| Variable manufacturing overhead per direct labor-hour | $ | 3.40 |
The predetermined overhead rate for the Assembly Department is closest to:
|
$8.20 per direct labor-hour
|
||
|
$11.60 per direct labor-hour
|
||
|
$3.40 per direct labor-hour
|
||
|
$4.06 per direct labor-hour
|
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