Remember that we assume cost is applied using the standard costing. Harper's total overhead efficiency variance (OSV) for the month was:
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.
Harper Company's performance report indicated the following information for the past month:
Actual total
Budgeted fixed overhead 1,500,000
Applied fixed overhead at P3 per labor hour 1,200,000
Applied variable overhead at P0.50 per labor hour 200,000
Actual labor hours 430,000
Remember that we assume cost is applied using the
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