Metlock Company applies overhead based on direct labour hours. Two direct labour hours are required for each unit of product. Planned production for the period was set at 9,000 units. Manufacturing overhead is budgeted at $126,000 for the period (20% of this cost is fixed). The 16,830 hours worked during the period resulted in the production of 8,230 units. The variable manufacturing overhead cost incurred was $102,300 and the fixed manufacturing overhead cost was $28,100. please complete 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.
Metlock Company applies overhead based on direct labour hours. Two direct labour hours are required for each unit of product. Planned production for the period was set at 9,000 units. Manufacturing overhead is budgeted at $126,000 for the period (20% of this cost is fixed). The 16,830 hours worked during the period resulted in the production of 8,230 units. The variable
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