Q3. A company follows the system of standard costing. The records of the company reveal the following information for the month of May: |Budgeted Actual Number of man-hours Number of working days 8000 8600 20 22 Overhead rate per hour { 1.00 Hours per unit of output 20 Fixed Overheads incurred 7,200 Number of units produced 450 units For the month of May, calculate the following variances for fixed overheads: (0) (i) Overhead Cost variance Overhead Volume variance Overhead Efficiency variance (iv) Overhead Capacity variance (v) Overhead Budget variance (vi) Calendar variance
Q3. A company follows the system of standard costing. The records of the company reveal the following information for the month of May: |Budgeted Actual Number of man-hours Number of working days 8000 8600 20 22 Overhead rate per hour { 1.00 Hours per unit of output 20 Fixed Overheads incurred 7,200 Number of units produced 450 units For the month of May, calculate the following variances for fixed overheads: (0) (i) Overhead Cost variance Overhead Volume variance Overhead Efficiency variance (iv) Overhead Capacity variance (v) Overhead Budget variance (vi) Calendar variance
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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