Harris Manufacturing produces white sauce. It uses units as the cost driver for overhead. The following information was provided concerning its standard cost system for 2020: Budgeted and Standard Data Actual Data Material 1/4 lb. @ $14 per pound Produced 6,100 units Labor 1.4 hrs. @ $16 per hour
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.
Harris Manufacturing produces white sauce. It uses units as the cost driver for
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Budgeted and Standard Data |
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Actual Data |
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Material |
1/4 lb. @ $14 per pound |
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Produced |
6,100 units |
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Labor |
1.4 hrs. @ $16 per hour |
Materials purchased |
1,600 lbs. for $13.70/pound |
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Total fixed overhead |
$84,000 |
Materials used |
1,520 lbs. |
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Variable overhead |
$6.50 per unit |
Labor worked |
8,740 hrs. at $15.90/hour |
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Production |
6,000 units |
Total overhead |
$122,000 |
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How much is the flexible budget for overhead for 2020?
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$122,000 |
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$123,000 |
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$127,100 |
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$124,300 |
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$123,650 |
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