Acme Company manufactures and sells two products, Product A and Product B. Acme's total manufacturing overhead cost is $112,000, and Acme applies overhead to jobs using three activity-based overhead rates, computed as follows: Activity Setups Machining Packaging O $22.40 O $20.80 O $24.40 Cost pool Allocation base Number of setups Machine hours $10,000 Units packed O $24.80 ? ? Units of allocation base Product A Product B 20 setups ? 350 units If Acme decides to use a plantwide overhead rate with machine hours as the allocation base, what would be its plantwide overhead rate? 20 setups 1,000 hours 150 units Allocation rate $300 per setup $18 per MH ?
Acme Company manufactures and sells two products, Product A and Product B. Acme's total manufacturing overhead cost is $112,000, and Acme applies overhead to jobs using three activity-based overhead rates, computed as follows: Activity Setups Machining Packaging O $22.40 O $20.80 O $24.40 Cost pool Allocation base Number of setups Machine hours $10,000 Units packed O $24.80 ? ? Units of allocation base Product A Product B 20 setups ? 350 units If Acme decides to use a plantwide overhead rate with machine hours as the allocation base, what would be its plantwide overhead rate? 20 setups 1,000 hours 150 units Allocation rate $300 per setup $18 per MH ?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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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