AirPro Corp. reports the following for November. Compute the total overhead variance and controllable overhead variance for November and classify each as favorable or unfavorable. Actual total factory overhead incurred . $28,175 Standard factory overhead: Variable overhead . $3.10 per unit produced Fixed overhead ($12,000∕12,000 predicted units to be produced) $1 per unit Predicted units to produce 12,000 units Actual units produced 9,800 units
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.
AirPro Corp. reports the following for November. Compute the total
overhead variance for November and classify each as favorable or unfavorable. Actual total factory overhead incurred . $28,175
Standard factory overhead:
Variable overhead . $3.10 per unit produced
Fixed overhead ($12,000∕12,000 predicted units to be produced) $1 per unit
Predicted units to produce 12,000 units
Actual units produced 9,800 units
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