Ilocos Norte Manufacturing company estimates its factory overhead for the next period at P108,000.00. It is estimated that 36,000 units will be produced at a material cost of P45,000 and will require 24,000 direct labor hours at an estimated cost of P120,000.00. The machine will run abut 800 hours What is the predetermined factory overhead rate per unit based on units of production.
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.
Ilocos Norte Manufacturing company estimates its factory
What is the predetermined factory overhead rate per unit based on units of production.
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