Luxury Goods Pty Ltd allocates manufacturing overhead to work in process on the basis of machine hours. On 1 January of the current year, there were no balances in work in process or finished goods inventories. The following estimates were included in the budget for the current year:Total estimated manufacturing overhead$300 000Total estimated machine hours40 000During January, the firm worked on the following production jobs:B81:1 600 machine hoursJ76:2 400 machine hoursM49:1 000 machine hoursDuring January, job numbers B81 and J76 were completed, and job number B81 was sold. The actual manufacturing overhead incurred during January was $30 000.Required:a) Calculate the company’s predetermined overhead rate for the year.b) How much manufacturing overhead was applied to production during January?c) Calculate the overapplied or underapplied overhead for January
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.
Luxury Goods Pty Ltd allocates manufacturing
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