Accounting Question
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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![Required Information
Use the following information for the Exercises below. (Algo)
[The following information applies to the questions displayed below.]
Manuel Company predicts it will operate at 80% of its productive capacity. Its overhead allocation base is DLH and its
standard amount per allocation base is 0.5 DLH per unit. The company reports the following for this period.
Production (in units)
Overhead
Variable overhead
Fixed overhead
Total overhead
Flexible Budget at 80%
Capacity
52,000
1. Standard overhead rate
2. Standard overhead applied
3. Overhead variance
$ 286,000
52,000
$ 338,000
Actual
Results
47,200
$ 331,400
Exercise 21-17 (Algo) Computing standard overhead rate and total overhead varlance LO P4
Compute the standard overhead rate. Hint: Standard allocation base at 80% capacity is 26,000 DLH, computed as 52,000 units x
5 DLH per unit.
Compute the standard overhead applied.
. Compute the total overhead variance. (Indicate the effect of the variance by selecting favorable, unfavorable, or no variance.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fea1f8e50-0548-4612-a22c-3a6401a939fa%2Ffdd39199-bae9-434c-ac08-c53c52fd34c0%2Fa19w2ve_processed.png&w=3840&q=75)
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