Hydro Sports budgets overhead cost of $660,000 for the year. The company manufactures two types of jet skis: standard and deluxe. Budgeted direct labor hours per unit are 8 for the standard model and 14 for the deluxe model. The company budgets production of 120 units of the standard model and 120 units of the deluxe model for the year. 1. Compute the total number of budgeted direct labor hours for the year. 2. Compute the plantwide overhead rate using budgeted direct labor hours. 3. Compute overhead cost per unit for each model using the plantwide overhead rate. Actual direct labor hours per unit are 8 for the standard model and 14 for the deluxe model.
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.
Hydro Sports budgets
1. Compute the total number of budgeted direct labor hours for the year.
2. Compute the plantwide overhead rate using budgeted direct labor hours.
3. Compute overhead cost per unit for each model using the plantwide overhead rate. Actual direct labor hours per unit are 8 for the standard model and 14 for the deluxe model.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 4 images
