Current Attempt in Progress Indigo Company's overhead rate was based on estimates of $195,600 for overhead costs and 19,560 direct labour hours. Indigo's standards allow 2 hours of direct labour per unit produced. Production in May was 900 units, and actual overhead incurred in May was $19,000. The overhead budgeted for 1,800 standard direct labour hours is $17.490 ($4.890 fixed and $12,600 variable). (a) Calculate the total, budget, and volume variances for overhead. Total overhead variance Overhead budget variance Overhead volume variance $
Current Attempt in Progress Indigo Company's overhead rate was based on estimates of $195,600 for overhead costs and 19,560 direct labour hours. Indigo's standards allow 2 hours of direct labour per unit produced. Production in May was 900 units, and actual overhead incurred in May was $19,000. The overhead budgeted for 1,800 standard direct labour hours is $17.490 ($4.890 fixed and $12,600 variable). (a) Calculate the total, budget, and volume variances for overhead. Total overhead variance Overhead budget variance Overhead volume variance $
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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Transcribed Image Text:Current Attempt in Progress
Indigo Company's overhead rate was based on estimates of $195,600 for overhead costs and 19,560 direct labour hours. Indigo's
standards allow 2 hours of direct labour per unit produced. Production in May was 900 units, and actual overhead incurred in May was
$19,000. The overhead budgeted for 1,800 standard direct labour hours is $17.490 ($4.890 fixed and $12.600 variable).
(a) Calculate the total, budget, and volume variances for overhead.
Total overhead variance
Overhead budget variance $
Overhead volume variance
Touthank and Madis
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