is applied on the basis of machine hours required for cutting and fabricating. A predetermined overhead application rate of $12.70 per machine hour was established for 2019. Required: If 9,000 machine hours were expected to be used during 2019, how much overhead was expected to be incurred? Actual overhead incurred during 2019
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.
Checker Inc. produces automobile bumpers.
Required:
- If 9,000 machine hours were expected to be used during 2019, how much overhead was expected to be incurred?
- Actual overhead incurred during 2019 totaled $121,650, and 9,100 machine hours were used during 2019. Calculate the amount of over- or underapplied overhead for 2019. (Input the amount as positive value.)
- Whether the overapplied or underapplied overhead for the year is normally transferred to cost of goods sold in the income statement?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
