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Unformatted text preview: MANUFACTURING OVERHEAD VARIANCES The total overhead variance is the difference between the actual overhead costs and overhead costs applied based on standard hours allowed . As indicated in Illustration 22-8 , Xonic incurred overhead costs of $10,900 to produce 1,000 gallons of Weed-O in June. The computation of the actual overhead is comprised of a variable and a fixed component. Illustration 22-20 shows this computation. Illustration 22-20 Actual overhead costs To find the total overhead variance in a standard costing system, we determine the overhead costs applied based on standard hours allowed. Standard hours allowed are the hours that should have been worked for the units produced. Because it takes two hours of direct labor to produce one gallon of Weed-O, for the 1,000-gallon Weed-O order, the standard hours allowed are 2,000 hours (1,000...
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This note was uploaded on 11/08/2011 for the course ACCOUNTING ac 202 taught by Professor - during the Fall '11 term at Montgomery.
- Fall '11