Y= X + 3. Express the company's total overhead cost in the linear equation form Y a bX. (Do not round your intermediate calculations. Round the "Variable cost per machine-hours" to 2 decimal places.) Variable Cost per Fixed Cost Machine-Hour Utilities cost Supervisory salaries cost Maintenance cost Total overhead cost 4. What total overhead cost would you expect to be incurred at an activity level of 47,000 machine-hours? (Do not round intermediate calculations.) Total overhead cost
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.
Nova Company’s total overhead cost at various levels of activity are presented below:
| Month | Machine- Hours |
Total Overhead Cost |
||
| April | 52,000 | $ | 203,860 | |
| May | 42,000 | $ | 181,060 | |
| June | 62,000 | $ | 226,660 | |
| July | 72,000 | $ | 249,460 | |
|
|
Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 42,000 machine-hour level of activity is:
| Utilities (variable) | $ | 50,400 | ||
| Supervisory salaries (fixed) | 67,000 | |||
| Maintenance (mixed) | 63,660 | |||
| Total overhead cost | $ | 181,060 | ||
|
|
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
