Using the following information Actual direct labor hours used, 4,700 Contracts served 1,500 Standard hours per contract served 3 Budgeted variable overhead per standard DL hour Ph 2 Actual variable overhead incurred Ph 9,500 Required: Compute (1) variable overhead efficiency variance (2) 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.
Using the following information
Actual direct labor hours used, 4,700
Contracts served 1,500
Standard hours per contract served 3
Budgeted variable
Actual variable overhead incurred Ph 9,500
Required: Compute (1) variable overhead efficiency variance
(2) variable overhead spending variance
Xo Co. uses a predetermined factory overhead application rate based on direct labor cost. For the year ended December 31, Xo's budgeted factory overhead was P600,000 based on a budgeted volume of 50,000 direct labor hours at a standard direct labor rate of P6 per hour. Actual factory overhead amounted to P620,000 with actual direct labor cost of P325,000. For the year, over applied factory overhead was?
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