Blaze Corporation allocates overhead on the basis of DLH and the standard amount per allocation base is 4 DLH per unit. For March, the company planned production of 8,000 units (80% of its production capacity of 10,000 units) and prepared the following budget. The company actually operated at 90% capacity (9,000 units) in March and incurred actual total overhead costs of $89,870. Overhead Budget Production in units Budgeted variable overhead Budgeted fixed overhead 80% Operating Levels 8,000 $36,000 $ 51,000 1. Compute the standard overhead rate. Hint Standard allocation base at 80% capacity is 30,000 DLH, computed as 8,000 units x 4 DLH per unit. 2. Compute the total overhead variance.
Blaze Corporation allocates overhead on the basis of DLH and the standard amount per allocation base is 4 DLH per unit. For March, the company planned production of 8,000 units (80% of its production capacity of 10,000 units) and prepared the following budget. The company actually operated at 90% capacity (9,000 units) in March and incurred actual total overhead costs of $89,870. Overhead Budget Production in units Budgeted variable overhead Budgeted fixed overhead 80% Operating Levels 8,000 $36,000 $ 51,000 1. Compute the standard overhead rate. Hint Standard allocation base at 80% capacity is 30,000 DLH, computed as 8,000 units x 4 DLH per unit. 2. Compute the total overhead variance.
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter8: Standard Cost Accounting—materials, Labor, And Factory Overhead
Section: Chapter Questions
Problem 17P: Shinto Corp. uses a standard cost system and manufactures one product. The variable costs per...
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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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