unit cost
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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.
Topic Video
Question
John associates produces carburetors for small engines and uses a normal costing system. The following
data are available for 2019.
Budgeted:
Overhead $ 4,500,000
Machine hours 187,500
Direct labor hours 600,000
Actual:
Unit produced 750,000
Overhead $4,466,250
Prime cost $ 6,750,000
Machine hours 187,875
Direct labor hours 585,000
Overhead is applied based on direct labor
1How can JohnAssociates decide whether to use direct labor hours or machine hours as the basis
for applying overhead?
2.whats is the unit cost for the year?
3.Base on machine hours what's the unit cost
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