The Ring The Bells, Co. collected the following data regarding production of one of its products. Budgeted units 12,500 units Standard direct labor hours per unit of output 1.2 DL hours per unit Predetermined
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 Ring The Bells, Co. collected the following data regarding production of one of its products.
|
|
|
|
|
|
|
Budgeted units |
|
12,500 |
|
units |
|
Standard direct labor hours per unit of output |
|
1.2 |
|
DL hours per unit |
|
Predetermined variable factory |
|
$2.50 |
|
Per DL hour |
|
Predetermined fixed factory overhead rate |
|
$1.75 |
|
Per DL hour |
|
Actual finished units produced |
|
11,800 |
|
units |
|
Actual direct labor hours |
|
13,900 |
|
hrs. |
|
Actual variable overhead costs incurred |
$ |
37,530 |
|
|
|
Actual fixed overhead costs incurred |
$ |
28,500 |
|
|
Compute the variable overhead cost variance.
| a. |
$2,780U |
|
| b. |
$30F |
|
| c. |
$30U |
|
| d. |
$2,130U |
|
| e. |
$2,130F |
Step by step
Solved in 2 steps
