The Six-C Corporation uses a standard costing system in which variable factory overhead is assigned to production on the basis of the number of machine setups. The following data pertain to one month's operations: Manufacturing overhead cost incurred - P70,000 Total Variable Overhead variance - P4,550 favorable Standard machine setups allowed for actual production -3,550 Actual machine setups incurred - 3,500. What is the standard variable overhead rate per machine setup? What is the variable overhead spending variance?
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 Six-C Corporation uses a
Total Variable Overhead variance - P4,550 favorable
Standard machine setups allowed for actual production -3,550
Actual machine setups incurred - 3,500.
What is the standard variable overhead rate per machine setup?
What is the variable overhead spending variance?
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