Vin Diesel Company uses a standard costing system in which it applies manufacturing overhead to units of product on the basis of standard direct labor-hours. The company’s total applied factory overhead was P315,000 last year when the company used 32,000 direct labor hours as it activity base. If the variable factory overhead rate was P8 per direct labor hour, and if 30,000 standard labor hours were allowed for the output of that year, then the total budgeted fixed factor overhead for that year must have been?
Vin Diesel Company uses a standard costing system in which it applies manufacturing overhead to units of product on the basis of standard direct labor-hours. The company’s total applied factory overhead was P315,000 last year when the company used 32,000 direct labor hours as it activity base. If the variable factory overhead rate was P8 per direct labor hour, and if 30,000 standard labor hours were allowed for the output of that year, then the total budgeted fixed factor overhead for that year must have been?
Chapter1: Financial Statements And Business Decisions
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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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Vin Diesel Company uses a standard costing system in which it applies manufacturing overhead to units of product on the basis of standard direct labor-hours. The company’s total applied factory overhead was P315,000 last year when the company used 32,000 direct labor hours as it activity base. If the variable factory overhead rate was P8 per direct labor hour, and if 30,000 standard labor hours were allowed for the output of that year, then the total budgeted fixed factor overhead for that year must have been?
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