The predetermined factory overhead rate is: Multiple Choice 212% of direct labor costs. 215% of direct labor costs. 222% of direct labor costs. 203% of direct labor costs. 210% of direct labor costs.
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.
Maple Mount Fishery is a canning company in Astoria. The company uses a normal costing system in which factory
| Direct materials used | $ 384,000 |
|---|---|
| Direct labor | 306,000 |
| Factory overhead | 658,000 |
The January 1 balances of inventory accounts are shown below.
| Materials-all direct | $ 70,000 |
|---|---|
| Work-in-process | 41,000 |
| Finished goods | 26,000 |
The December 31 balances of these inventory accounts were ten percent lower than the balances at the beginning of the year.
The predetermined factory overhead rate is:
-
212% of direct labor costs.
-
215% of direct labor costs.
-
222% of direct labor costs.
-
203% of direct labor costs.
-
210% of direct labor costs.
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