James Ltd. absorbs manufacturing overhead using a predetermined machine hour rate. Relevant information for the quarter just ended is: Budgeted machine hours 130,000 Actual machine hours worked 120,000 Budgeted overhead cost €156,000 Actual overhead cost €187,200 1. What was the pre-determined overhead absorption rate per machine hour used to assign manufacturing overhead to products during the past quarter? (a) €1.20 (b) €1.30 (c) €1.44 (d) €1.56
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.
James Ltd. absorbs manufacturing
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