KrisKross Inc.’s total predetermined overhead rate is $50 per hour based on a monthly capacity of 118,800 machine hours. Overhead is 30 percent variable and 70 percent fixed. During September, KrisKross produced 10,200 units of product and recorded 120,000 machine hours. September’s actual overhead cost was $5,854,000. Each unit of product requires 12 machine hours. Standard hours for September: $122,400 Total monthly budget overhead cost: $4,158,000 c. What is the controllable overhead variance? Note: Do not use a negative sign with your answer. d. What is the noncontrollable overhead variance? Note: Do not use a negative sign with your answer.
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.
OH variances
KrisKross Inc.’s total predetermined
During September, KrisKross produced 10,200 units of product and recorded 120,000 machine hours. September’s actual overhead cost was $5,854,000. Each unit of product requires 12 machine hours.
Standard hours for September: $122,400
Total monthly budget overhead cost: $4,158,000
c. What is the controllable overhead variance?
Note: Do not use a negative sign with your answer.
d. What is the noncontrollable overhead variance?
Note: Do not use a negative sign with your answer.
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