The Denmark Company estimates its factory overhead for the next period at 425,000. It is estimated that 500,000 units will be produced at a materials cost of 1,000,000 and will require 250,000 direct labor hours at an estimated cost of 1,062,500. The machines will run about 100,000 hours. Required: The predetermined factory overhead rate based on 1. Material Cost 2. Units of Production 3. Machine Hours 4. Direct Labor Cost 5. Direct Labor Hours
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.
The Denmark Company estimates its factory
Required:
The predetermined factory overhead rate based on
1. Material Cost
2. Units of Production
3. Machine Hours
4. Direct Labor Cost
5. Direct Labor Hours
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