Heroux Corporation has two manufacturing departments--Forming and Customizing. The company used the following data at the beginning of the year to calculate predetermined overhead rates: Forming Customizing Total Estimated total machine-hours (MHs) 3,000 7,000 10,000 Estimated total fixed manufacturing overhead cost $ 16,500 $ 20,300 $ 36,800 Estimated variable manufacturing overhead cost per MH $ 1.70 $ 2.50
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.
Heroux Corporation has two manufacturing departments--Forming and Customizing. The company used the following data at the beginning of the year to calculate predetermined
| Forming | Customizing | Total | ||||
| Estimated total machine-hours (MHs) | 3,000 | 7,000 | 10,000 | |||
| Estimated total fixed |
$ | 16,500 | $ | 20,300 | $ | 36,800 |
| Estimated variable manufacturing overhead cost per MH | $ | 1.70 | $ | 2.50 |
During the most recent month, the company started and completed two jobs--Job A and Job H. There were no beginning inventories. Data concerning those two jobs follow:
| Job A | Job H | |||
| Direct materials | $ | 12,800 | $ | 6,700 |
| Direct labor cost | $ | 24,300 | $ | 7,800 |
| Forming machine-hours | 2,000 | 1,000 | ||
| Customizing machine-hours | 2,800 | 4,200 |
Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. The amount of manufacturing overhead applied to Job A is closest to:
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