Overheads cost analysis R Production 4 400 000 Materials handling 1 000 000 Set-up 1 050 000 Quality control 1 900 000 Materials procurement 400 000 Cost driver analysis Cost drivers Product A Product B Total Direct labour hours 320 000 180 000 500 000 Number of set-ups 420 280 700 Materials movements 700 300 1 000 Number of orders 1 300 700 2 000 Number of inspections 1 140 760 1 900 Annual output Product A 200 000 units Product B 100 000 units Use the information provided below to calculate the overhead cost per product using the following costing systems: Traditional Absorption Costing, using direct labour hours as the basis for allocation. Activity-Based Costing
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.
R
Production 4 400 000
Materials handling 1 000 000
Set-up 1 050 000
Quality control 1 900 000
Materials procurement 400 000
Cost driver analysis
Cost drivers Product A Product B Total
Direct labour hours 320 000 180 000 500 000
Number of set-ups 420 280 700
Materials movements 700 300 1 000
Number of orders 1 300 700 2 000
Number of inspections 1 140 760 1 900
Annual output
Product A 200 000 units
Product B 100 000 units
Use the information provided below to calculate the overhead cost per product using the following
costing systems:
Traditional Absorption Costing, using direct labour hours as the basis for allocation.
Activity-Based Costing
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