A manufacturing company has a standard costing system based on standard direct labor-hours (DLHS) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given belo Denominator level of activity 6,000 DLHS Overhead costs at the denominator activity level: Variable overhead cost Fixed overhead cost The following data pertain to operations for the most recent period: Actual hours Standard hours allowed for the actual output Actual total variable manufacturing overhead cost Actual total fixed manufacturing overhead cost The overhead applied to products during the period was closest to: Multiple Choice $112,220 $108,600 $109,580 $ 31,630 $ 76,970 6,200 DLHS 6,184 DLHS $ 30,810 $ 97,350

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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.