Zero Company's standard factory overhead rate is $3.82 per direct labor hour (DLH), calculated at 94.00% capacity = 920 standard DLHs. In December, the company operated at 83.00% of capacity, or 812 standard DLHs. Budgeted factory overhead at 83.00% of capacity is $3,270, of which $1,382 is fixed overhead. For December, the actual factory overhead cost was $3,900 for 855 actual DLHs, of which $1,340 was for fixed factory overhead. Under a three-way breakdown (decomposition) of the total overhead variance, what is the total factory overhead spending variance for Zero Company in December? $573 unfavorable N/A this variance doesn't exist under a three-way breakdown of the total overhead variance. $531 unfavorable $162 unfavorable $99 unfavorable
Zero Company's standard factory overhead rate is $3.82 per direct labor hour (DLH), calculated at 94.00% capacity = 920 standard DLHs. In December, the company operated at 83.00% of capacity, or 812 standard DLHs. Budgeted factory overhead at 83.00% of capacity is $3,270, of which $1,382 is fixed overhead. For December, the actual factory overhead cost was $3,900 for 855 actual DLHs, of which $1,340 was for fixed factory overhead. Under a three-way breakdown (decomposition) of the total overhead variance, what is the total factory overhead spending variance for Zero Company in December? $573 unfavorable N/A this variance doesn't exist under a three-way breakdown of the total overhead variance. $531 unfavorable $162 unfavorable $99 unfavorable
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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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