Steep, Inc. budgeted 8,000 cup holders for March. Each holder is sold for $12. Actual production for March was 8,200 cup holders. Manufacturing overhead is applied based on units produced. Standards and actual costs follow for March: Standards Actual Materials 1.1 pounds @ $2.40 a pound 6,400 pounds purchased for $15,040; 6,450 pounds used Labor 0.10 hours @ $14.00 per hour 620 hours @ $14.30 per hour Variable overhead $8,400 $9,500
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.
Steep, Inc. budgeted 8,000 cup holders for March. Each holder is sold for $12. Actual production for March was 8,200 cup holders. Manufacturing
|
|
Standards |
Actual |
|
Materials |
1.1 pounds @ $2.40 a pound |
6,400 pounds purchased for $15,040; 6,450 pounds used |
|
Labor |
0.10 hours @ $14.00 per hour |
620 hours @ $14.30 per hour |
|
Variable overhead |
$8,400 |
$9,500 |
|
Fixed overhead |
$4,800 |
$4,850 |
How much is the overhead controllable variance?
|
$1,355 unfavorable |
||
|
$940 unfavorable |
||
|
$490 unfavorable |
||
|
$490 favorable |
||
|
940 favorable |
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
