Mosaic Company applies overhead using machine hours and reports the following information. Compute the total variable overhead cost variance and classify it as favorable or unfavorable. Actual machine hours used . 4,700 hours Standard machine hours (for actual production) 5,000 hours Actual variable overhead rate per hour $4.15 Standard variable overhead rate per hour . $4.00
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.
Mosaic Company applies
the total variable overhead cost variance and classify it as favorable or unfavorable.
Actual machine hours used . 4,700 hours
Standard machine hours (for actual production) 5,000 hours
Actual variable overhead rate per hour $4.15
Standard variable overhead rate per hour . $4.00
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