Computing single plantwide overhead allocation rates The Oakman Company manufactures products in two departments: Mixing and Packaging. The company allocates manufacturing overhead using a single plantwide rate with direct labor hours as the allocation base. Estimated overhead costs for the year are $810,000 and estimated direct labor hours arc 360,000. In October, the company incurred 20,000 direct labor hours. Requirements Compute the predetermined overhead allocation rate. Round to two decimal places. Determine the amount of overhead allocated in October.
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.
Computing single plantwide overhead allocation rates
The Oakman Company manufactures products in two departments: Mixing and Packaging. The company allocates manufacturing overhead using a single plantwide rate with direct labor hours as the allocation base. Estimated overhead costs for the year are $810,000 and estimated direct labor hours arc 360,000. In October, the company incurred 20,000 direct labor hours.
Requirements
- Compute the predetermined overhead allocation rate. Round to two decimal places.
- Determine the amount of overhead allocated in October.
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