Gitano Products operates a job-order costing system and applies overead cost to jobs on the basis of dire production (not on the basis of raw materials purchased) its predetermined overhead rate was based on a $121,800 of manufacturing overhead for an estimated allocation base of $87,000 direct material dollars to b company has provided the following data for the just completed year Purchase of raw materials Direct labor cost Manufacturing overhead costs: Indirect labor Property taxes Depreciation of equipment Maintenance Insurance Rent, building $ 131,000 $ 83,000 $ 118,700 $ 8,900 $ 19,000 $ 12,000 $ 8,400 $ 35,000
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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