Mac Manufacturing uses a predetermined overhead rate of P19.10 per direct labor hour. This predetermined rate was based on a cost formula that estimates P246,390 of total manufacturing overhead for an estimated activity level of 12,900 direct labor-hours. The company incurred actual total manufacturing overhead costs of P245,000 and 12,400 total direct labor-hours during the period. Required: Determine the amount of underapplied or overapplied overhead for the period.
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.
Mac Manufacturing uses a predetermined
Required: Determine the amount of underapplied or overapplied overhead for the period.
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