The standard factory overhead rate is $10 per direct labor hour ($8 for variable factory overhead and $2 for fixed factory overhead) based on 100% of normal capacity of 30,000 direct labor hours. The standard cost and the actual cost of factory overhead for the production of 5,000 units during May were as follows: Standard: Actual: 25,000 hours at $10 Variable factory overhead Fixed factory overhead $250,000 a. $12,500 unfavorable b. $12,500 favorable c. $10,000 unfavorable d. $10,000 favorable $202,500 60,000 The fixed factory overhead volume variance is
The standard factory overhead rate is $10 per direct labor hour ($8 for variable factory overhead and $2 for fixed factory overhead) based on 100% of normal capacity of 30,000 direct labor hours. The standard cost and the actual cost of factory overhead for the production of 5,000 units during May were as follows: Standard: Actual: 25,000 hours at $10 Variable factory overhead Fixed factory overhead $250,000 a. $12,500 unfavorable b. $12,500 favorable c. $10,000 unfavorable d. $10,000 favorable $202,500 60,000 The fixed factory overhead volume variance is
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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 standard factory overhead rate is $10
per direct labor hour ($8 for variable factory
overhead and $2 for fixed factory
overhead) based on 100% of normal
capacity of 30,000 direct labor hours. The
standard cost and the actual cost of factory
overhead for the production of 5,000 units
during May were as follows:
Standard:
Actual:
25,000 hours at
$10
Variable factory
overhead
Fixed factory
overhead
$250,000
a. $12,500 unfavorable
b. $12,500 favorable
c. $10,000 unfavorable
d. $10,000 favorable
$202,500
60,000
The fixed factory overhead volume
variance is
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