The predetermined overhead rate for Sheridan Company is $4, comprised of a variable overhead rate of $2 and a fixed rate of $2. The amount of budgeted overhead costs at normal capacity of $120000 was divided by normal capacity of 30000 direct labor hours, to arrive at the predetermined overhead rate of $4. Actual overhead for June was $8200 variable and $6000 fixed, and 2500 units were produced. The direct labor standard is 2 hours per unit produced. The total overhead variance is O $2500 F O $5800 U. $2500 U. $5800 F.
The predetermined overhead rate for Sheridan Company is $4, comprised of a variable overhead rate of $2 and a fixed rate of $2. The amount of budgeted overhead costs at normal capacity of $120000 was divided by normal capacity of 30000 direct labor hours, to arrive at the predetermined overhead rate of $4. Actual overhead for June was $8200 variable and $6000 fixed, and 2500 units were produced. The direct labor standard is 2 hours per unit produced. The total overhead variance is O $2500 F O $5800 U. $2500 U. $5800 F.
Chapter1: Financial Statements And Business Decisions
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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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Transcribed Image Text:The predetermined overhead rate for Sheridan Company is $4, comprised of a variable overhead rate of $2 and a fixed rate of $2. The
amount of budgeted overhead costs at normal capacity of $120000 was divided by normal capacity of 30000 direct labor hours, to
arrive at the predetermined overhead rate of $4. Actual overhead for June was $8200 variable and $6000 fixed, and 2500 units were
produced. The direct labor standard is 2 hours per unit produced. The total overhead variance is
O $2500 F.
$5800 U.
Ⓒ$2500 U.
$5800 F.
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