What is the estimated annual fixed manufacturing overhead ? If estimated fixed overhead is equal to actual fixed overhead, what is the amount of under- or over applied overhead in 1999 under absorption costing and variable costing? b What is the product cost per unit and expense will be charged against revenues in 1999 under absorption costing and variable costing and c. Will pretax income be higher under absorption or variable costing? By what amount?
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.
Fixed manufacturing
a. What is the estimated annual fixed manufacturing overhead ? If estimated fixed overhead is equal to actual fixed overhead, what is the amount of under- or over applied overhead in 1999 under absorption costing and variable costing?
b What is the product cost per unit and expense will be charged against revenues in 1999 under absorption costing and variable costing and
c. Will pretax income be higher under absorption or variable costing? By what amount?
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