The following information relating to a company's overhead costs is available. Actual total variable overhead Actual total fixed overhead Budgeted variable overhead rate per machine hour Budgeted total fixed overhead. Budgeted machine hours allowed for actual output Based on this information, the total variable overhead variance is: Multiple Choice O O O O $5,000 favorable. $6,000 favorable. $5,000 unfavorable. $6,000 unfavorable. $2,344 favorable. $ 75,000 $ 14,000 $ 2.50 $ 15,000 32,000
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.
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