Patel and Sons Inc. uses a standard cost system to apply factory overhead costs to units produced. Practical capacity for the plant is defined as 53,400 machine hours per year, which represents 26,700 units of output. Annual budgeted fixed factory overhead costs are $267,000 and the budgeted variable factory overhead cost rate is $3.10 per unit. Factory overhead costs are applied on the basis of standard machine hours allowed for units produced. Budgeted and actual output for the year was 20,600 units, which took 42,400 machine hours. Actual fixed factory overhead costs for the year amounted to $258,200 while the actual variable overhead cost per unit was $3.00. Based on the information provided above, calculate the following factory overhead variances for the year. Indicate whether each variance is favorable (F) or unfavorable (U). (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.)
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Patel and Sons Inc. uses a standard cost
system to apply factory overhead costs to
units produced. Practical capacity for the
plant is defined as 53,400 machine hours
per year, which represents 26,700 units of
output. Annual budgeted fixed factory
overhead costs are $267,000 and the
budgeted variable factory overhead cost
rate is $3.10 per unit. Factory overhead
costs are applied on the basis of standard
machine hours allowed for units produced.
Budgeted and actual output for the year
was 20,600 units, which took 42,400
machine hours. Actual fixed factory
overhead costs for the year amounted to
$258,200 while the actual variable
overhead cost per unit was $3.00.
Based on the information provided above,
calculate the following factory overhead
variances for the year. Indicate whether
each variance is favorable (F) or
unfavorable (U). (Do not round
intermediate calculations. Round your final
answers to nearest whole dollar amount.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F378d1a2b-4d55-4a40-9162-2199e0820ba7%2Fbd7f0dff-fe66-4b80-bd11-f5c43a54e982%2F1j4jxof_processed.jpeg&w=3840&q=75)
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