Mona moobl3 Ltd operates a standard costing system and absorbs overheads on the basis of standard labour hours. There were 500,000 labour hours budgeted and the budgeted production overheads were GH¢300,000 for the forthcoming year. The company budgeted to produce 125,000 units. The actual results for the period were as follows: Overheads-GH¢350,000, Output-130,000 units and Labour hours 450,000 hours. Which ONE of the following statements is correct? A. Overheads were GH¢38,000 over-absorbed. B. Overheads were GH¢38,000 under-absorbed. C. Overheads were GH¢80,000 over-absorbed. D. Overheads were GH¢80,000 under-absorbed
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.
Mona moobl3 Ltd operates a
A. Overheads were GH¢38,000 over-absorbed.
B. Overheads were GH¢38,000 under-absorbed.
C. Overheads were GH¢80,000 over-absorbed.
D. Overheads were GH¢80,000 under-absorbed
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