Pasternik Company produces and sells two products, Alpha and Zeta. The following information is available relating to its setup activities: Alpha Zeta Units produced 250 20,000 Batch size (units) 10 500 Total direct labor hours 1,000 39,000 Cost per setup $ 2,000 $ 2,000 With a volume-based costing system that applies overhead based on direct labor hours, the setup cost portion of overhead for each unit is: (Rounded to the nearest cent.) Alpha Zeta A) $ 3.25 $ 3.25 B) $ 13.00 $ 6.34 C) $ 8.00 $ 0.10 D) $ 25.50 $ 25.50 E) $ 102.00 $ 49.73
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.
Pasternik Company produces and sells two products, Alpha and Zeta. The following information is available relating to its setup activities:
| Alpha | Zeta | |||||
| Units produced | 250 | 20,000 | ||||
| Batch size (units) | 10 | 500 | ||||
| Total direct labor hours | 1,000 | 39,000 | ||||
| Cost per setup | $ | 2,000 | $ | 2,000 | ||
With a volume-based costing system that applies overhead based on direct labor hours, the setup cost portion of overhead for each unit is: (Rounded to the nearest cent.)
| Alpha | Zeta | |||||
| A) | $ | 3.25 | $ | 3.25 | ||
| B) | $ | 13.00 | $ | 6.34 | ||
| C) | $ | 8.00 | $ | 0.10 | ||
| D) | $ | 25.50 | $ | 25.50 | ||
| E) | $ | 102.00 | $ | 49.73 | ||
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