Using the one-variance approach, what is the total overhead variance? NUBD Co. uses a standard cost system for its production process and appliesoverhead based on direct labor hours. The following information is available forAugust when NUBD made 4,500 units:Standard:2.50P1.75DLH per unitVariable overhead per DLHFixed overhead per DLHBudgeted variable overheadBudgeted fixed overheadP3.10P21,875P38,750Actual:Direct labor hoursVariable overhead10,000P26,250P38,000Fixed overhead

Name: Using the one-variance approach, what is the total overhead variance?
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Description: Using the one-variance approach, what is the total overhead variance? NUBD Co. uses a standard cost system for its production process and appliesoverhead based on direct labor hours. The following information is available forAugust when NUBD made 4,5

Solution: Actual overhead = P26,250 + P38,000 = P64,250 Overhead applied =SH * SR = (4500*2.50) *…

Business

Accounting

ugust when NUBD made 4,500 units: Standard: DLH per unit Variable overhead per DLH Fixed overhead per DLH Budgeted variable overhead Budgeted fixed overhead 2.50 P1.75 P3.10 P21,875 P38,750 Actual: Direct labor hours 10,000 P26 250 Variable overbead

ugust when NUBD made 4,500 units: Standard: DLH per unit Variable overhead per DLH Fixed overhead per DLH Budgeted variable overhead Budgeted fixed overhead 2.50 P1.75 P3.10 P21,875 P38,750 Actual: Direct labor hours 10,000 P26 250 Variable overbead

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Concept explainers

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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Question

Using the one-variance approach, what is the total overhead variance?

NUBD Co. uses a standard cost system for its production process and applies
overhead based on direct labor hours. The following information is available for
August when NUBD made 4,500 units:
Standard:
2.50
P1.75
DLH per unit
Variable overhead per DLH
Fixed overhead per DLH
Budgeted variable overhead
Budgeted fixed overhead
P3.10
P21,875
P38,750
Actual:
Direct labor hours
Variable overhead
10,000
P26,250
P38,000
Fixed overhead

Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.

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