ufacturing overhead was incurred during the year? Is manufacturing overhead underallocated or overallocated at the end of the year? By how much? 2. Were the jobs overcosted or undercosted? By how much? Manufacturing overhead costs. . . . . . $630,000 Direct labor cost. . . . . . . . . . . . . . . . . . $1,550,000 Machine hours. . . . . . . . . . . . . . . . . . . . 90,000
ufacturing overhead was incurred during the year? Is manufacturing overhead underallocated or overallocated at the end of the year? By how much? 2. Were the jobs overcosted or undercosted? By how much? Manufacturing overhead costs. . . . . . $630,000 Direct labor cost. . . . . . . . . . . . . . . . . . $1,550,000 Machine hours. . . . . . . . . . . . . . . . . . . . 90,000
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 11E: Ripley, Inc., costs products using a normal costing system. The following data are available for...
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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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Question
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1.
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How much manufacturing
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2.
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Were the jobs overcosted or undercosted? By how much?
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$630,000
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Direct labor cost. . . . . . . . . . . . . . . . . .
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$1,550,000
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Machine hours. . . . . . . . . . . . . . . . . . . .
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90,000
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At the end of the year, the company had actually incurred the following:
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Direct labor cost. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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$1,220,000
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Depreciation on manufacturing plant and equipment. . . .
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$500,000
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Property taxes on plant. . . . . . . . . . . . . . . . . . . . . . . . . .
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$21,000
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Sales salaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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$25,000
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Delivery drivers' wages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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$17,000
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Plant janitors' wages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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$8,500
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Machine hours. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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54,500 hours
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