Two- and three-variance overhead analysis: prime cost application base The California Electronics Corporation uses prime cost as
Question:
Two- and three-variance overhead analysis: prime cost application base The California Electronics Corporation uses prime cost as the basis for applying overhead costs to products. The Santa Barbara Division makes portable CD players. The budgeted output for 1993 was 10,000 units. Each unit requires $44 of direct materials and $6 of direct labor at standard. Budgeted manufacturing overhead costs for 1993 were $800,000 of which $600,000 was fixed costs.
During 1993, the company manufactured 10,400 units and used $466,000 of direct materials and $65,000 of direct labor. Actual manufacturing overhead for the year was $844,000.
REQUIRED
a. Prepare a two-variance analysis of overhead variances.
b. Prepare a three-variance analysis of overhead variances.
c. Calculate the standard per unit cost of the CD players.
d. Calculate the actual per unit cost of the CD players.
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