Crash Bang, Co. uses a standard cost system and provides the following information: Standards: Static budget variable overhead $5,590.00. Static budget fixed overhead $22,250.00. Static budget direct labor hours 566 hours. Static budget number of units 21,000 units. Static budget direct labor hours 0.023 hours per unit. Crash Bang, Co. allocates manufacturing overhead to production based on standard direct labor hours. Crash Bang, Co. reported the following actual results for 2020: Actual: Number of units produced 19,800. Actual variable overhead $5,230.00 Actual fixed overhead $24,570.00. Actual direct labor hours 485. (Round your answers to two decimal places when needed and use rounded answers for all future calculations). 1. Compute the fixed overhead allocation rates.
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.
Crash Bang, Co. uses a
Standards:
| Static budget variable overhead $5,590.00. |
|---|
| Static budget fixed overhead $22,250.00. |
| Static budget direct labor hours 566 hours. |
| Static budget number of units 21,000 units. |
| Static budget direct labor hours 0.023 hours per unit. |
Crash Bang, Co. allocates manufacturing overhead to production based on standard direct labor hours. Crash Bang, Co. reported the following actual results for 2020:
Actual:
| Number of units produced 19,800. |
|---|
| Actual variable overhead $5,230.00 |
| Actual fixed overhead $24,570.00. |
| Actual direct labor hours 485. |
(Round your answers to two decimal places when needed and use rounded answers for all future calculations).
1. Compute the fixed overhead allocation rates.
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