Indigo Company uses a standard cost system. Indirect costs were budgeted at $210,000 plus $15 per direct labour hour. The overhead rate is based on 10,500 hours. Actual results were: Standard direct labour hours allowed 8,860 Actual direct labour hours 10,500 Fixed overhead Variable overhead $188,900 $183,500 Calculate the fixed overhead production volume variance. Calculate the variable overhead spending variance. Calculate the variable overhead efficiency variance. Calculate the over- or underapplied over
Indigo Company uses a standard cost system. Indirect costs were budgeted at $210,000 plus $15 per direct labour hour. The overhead rate is based on 10,500 hours. Actual results were: Standard direct labour hours allowed 8,860 Actual direct labour hours 10,500 Fixed overhead Variable overhead $188,900 $183,500 Calculate the fixed overhead production volume variance. Calculate the variable overhead spending variance. Calculate the variable overhead efficiency variance. Calculate the over- or underapplied over
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:Indigo Company uses a standard cost system. Indirect costs were budgeted at $210,000 plus $15 per direct labour hour. The overhead rate is based on 10,500 hours. Actual results were: Standard
direct labour hours allowed 8,860 Actual direct labour hours 10,500 Fixed overhead Variable overhead $188,900 $183,500 Calculate the fixed overhead production volume variance. Calculate the
variable overhead spending variance. Calculate the variable overhead efficiency variance. Calculate the over- or underapplied over
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