Shown below are the relevant data relating to fixed overhead costs of Calming Balm Corporation for a recent period is given below: Costs: Actual fixed overhead incurred P88,000 Spending variance 4,000 F Activity: Number of units produced 9,500 Standard hours allowed per unit 3 Normal capacity (machine hours) 20,000 Overhead cost is applied to products on the basis of machine hours. Required: Budgeted fixed overhead Fixed overhead rate per hour and per unit Volume variance
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.
Shown below are the relevant data relating to fixed
Costs:
Actual fixed overhead incurred P88,000
Spending variance 4,000 F
Activity:
Number of units produced 9,500
Standard hours allowed per unit 3
Normal capacity (machine hours) 20,000
Overhead cost is applied to products on the basis of machine hours.
Required:
- Budgeted fixed overhead
- Fixed overhead rate per hour and per unit
- Volume variance
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