Nell Corporation manufactures computers. Assume that Nell: applies manufacturing overhead based on machine hours estimated 12,000 machine hours and $86,000 of manufacturing overhead costs actually used 13,000 machine hours and incurred the following actual costs: Data Table Indirect labor $ 7,000 Plant supplies 7,000 Depreciation on plant 47,000 Plant utilities 8,000 Machinery repair 15,000 Advertising 35,000 Direct labor 75,000 Sales commissions 23,000 What is Nell's actual manufacturing overhead cost? A. $217,000 B. $142,000 C. $84,000 D. $159,000
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.
Nell Corporation manufactures computers. Assume that Nell:
- applies manufacturing overhead based on machine hours
- estimated 12,000 machine hours and $86,000 of
manufacturing overhead costs - actually used 13,000 machine hours and incurred the following actual costs:
Data Table
|
Indirect labor |
$ 7,000 |
Plant supplies |
7,000 |
|||
|
|
47,000 |
Plant utilities |
8,000 |
|||
|
Machinery repair |
15,000 |
Advertising |
35,000 |
|||
|
Direct labor |
75,000 |
Sales commissions |
23,000 |
|||
|
|
|
|
|
|||
What is Nell's actual manufacturing overhead cost?
|
A. $217,000 |
B. $142,000 |
|
C. $84,000 |
D. $159,000 |
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