Answered: Astrid is working on her company's…

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter8: Standard Cost Accounting—materials, Labor, And Factory Overhead

Section: Chapter Questions

Problem 14P: Fargo Co. manufactures products in batches of 100 units per batch. The company uses a standard cost...

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Astrid is working on her company's variance analysis at year end. She has everything completed except the fixed-MOH variances. Budgeted fixed-MOH costs were $163,200 for the planned 12,000 units to be produced. Per standard cost sheets, fixed-MOH was applied based on DL hours; every unit required 4DL hours. Actual fixed-MOH costs totaled $165,000 for the year, corresponding to 12,400 actual units produced. Help Astrid to calculate the fixed-MOH price and volume variances for the year.

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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