Happy Valley Pet Products uses a standard costing system that applies overhead to products based on standard d labour-hours allowed for actual output of the period. During the recent year, the following data were collected: Total budgeted fixed overhead cost for the year Actual fixed overhead cost for the year Budgeted standard direct labour-hours Actual direct labour-hours Standard direct labour-hours allowed for the actual output $132,550 $129,050 24,100 25,600 22,100
Happy Valley Pet Products uses a standard costing system that applies overhead to products based on standard d labour-hours allowed for actual output of the period. During the recent year, the following data were collected: Total budgeted fixed overhead cost for the year Actual fixed overhead cost for the year Budgeted standard direct labour-hours Actual direct labour-hours Standard direct labour-hours allowed for the actual output $132,550 $129,050 24,100 25,600 22,100
Chapter1: Financial Statements And Business Decisions
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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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Transcribed Image Text:Happy Valley Pet Products uses a standard costing system that applies overhead to products based on standard direct
labour-hours allowed for actual output of the period. During the recent year, the following data were collected:
Total budgeted fixed overhead cost for the
year
Actual fixed overhead cost for the year
Budgeted standard direct labour-hours.
Actual direct labour-hours
Standard direct labour-hours allowed for the
actual output
Required:
1. Compute the fixed portion of the predetermined overhead rate for the year. (Round your answer to 2 decimal
places.)
Predetermined overhead
rate
$132,550
$129,050
24,100
25,600
22,100
per DLH
Fixed overhead budget
variance
Fixed overhead volume
variance
2. Compute the fixed overhead budget and volume variances. (Indicate the effect of each variance by selecting "F"
for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)
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