Rainbow Company Rainbow Company uses a standard cost system for its production process. Rainbow Company applies overhead based on direct labor hours. The following information is available for July: Standard: Direct labor hours per unit Variable overhead per hour Fixed overhead per hour (based on 11,990 DLHs) Actual: Units produced Direct labor hours Variable overhead Fixed overhead 2.20 $2.50 $3.00 4,400 8,800 $29,950 $42,300
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.
Based on the attached image:
a. Using the four-variance approach, what is the fixed
b. Using the four-variance approach, what is the variable overhead efficiency variance?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
