Reynoso Corporation manufactures titanium and aluminum tennis racquets. Reynoso’s total overhead costs consist of assembly costs and inspection costs. The following information is available: Cost Titanium Aluminum Total Cost Assembly 500 mach. hours 500 mach. hours $70000 Inspections 350 150 $108000 2100 labor hours 1900 labor hours Reynoso is considering switching from one overhead rate based on labor hours to activity-based costing. Total overhead costs assigned to titanium racquets, using a single overhead rate, are $93450. $108000. $89000. $124600.
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.
Reynoso Corporation manufactures titanium and aluminum tennis racquets. Reynoso’s total
| Cost | Titanium | Aluminum | Total Cost |
| Assembly | 500 mach. hours | 500 mach. hours | $70000 |
| Inspections | 350 | 150 | $108000 |
| 2100 labor hours | 1900 labor hours |
Reynoso is considering switching from one overhead rate based on labor hours to activity-based costing.
Total overhead costs assigned to titanium racquets, using a single overhead rate, are
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