Good Manufacturing Company applies manufacturing overhead at the rate of 150% of direct labor hour. During January 2022, Good incurred $45,000 of direct labor costs and $150,000 of actual manufacturing overhead costs. What is the amount of over- or underapplied manufacturing overhead for January 2022?
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.
Good Manufacturing Company applies manufacturing
Manufacturing overhead is the cost that is associated with making the product. Generally, these are estimated on the basis of indirect labor or direct labor etc. A set percentage is determined and estimates are made.
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