The Silver Corporation uses a predetermined overhead rate to apply manufacturing overhead to jobs. The predetermined overhead rate is based on labor cost in Dept. A and on machine-hours in Dept. B. At the beginning of the year, the Corporation made the following estimates: Dept. A Dept. B Direct labor cost $ 60,000 $ 40,000 Manufacturing overhead $ 90,000 $ 45,000 Direct labor-hours 6,000 9,000 Machine-hours 2,000 15,000 What predetermined overhead rates would be used in Dept. A and Dept. B, respectively? Multiple Choice 67% and $3.00 150% and $5.00 150% and $3.00 67% and $5.00
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 Silver Corporation uses a predetermined
| Dept. A | Dept. B | |||
| Direct labor cost | $ | 60,000 | $ | 40,000 |
| Manufacturing overhead | $ | 90,000 | $ | 45,000 |
| Direct labor-hours | 6,000 | 9,000 | ||
| Machine-hours | 2,000 | 15,000 | ||
What predetermined overhead rates would be used in Dept. A and Dept. B, respectively?
Multiple Choice
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67% and $3.00
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150% and $5.00
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150% and $3.00
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67% and $5.00
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