Overhead cost information for Production for the month of December is as follows: Total actual overhead incurred P12,600 Fixed overhead budgeted P3,300 Total standard overhead rate per DLH P4 Variable overhead rate per DLH P3 Standard hours allowed for actual production 3,500 What is the overall or net overhead variance? State if favorable or unfavorable (e.g. 1000 favorable)
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.
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