Report Case Study Example | Topics and Well Written Essays - 500 words - 1

Report - Case Study Example Note that the standard labor hours per unit = $ 5.75. Therefore, with respect to the application rate of the combined variable and fixed cost, the standard number of hours allowable = (5.75*4,100) = 23,575. Since we have the price of overhead per hour ($ 29.37), the standard combined variable and fixed overhead rate = (29.37*23,575) = $ 692,398. The predetermined total overhead cost per hour = $ 29.37. The variable cost per hour = $ 8.10. Therefore, the fixed cost per hour = (29.37 – 8.10) = $ 21.27. The variable portion of the overhead = (8.1*23,575) = $ 190,957.5 Consequently, the fixed portion of the predetermined overhead = (21.37*23,575) = $ 501,440.25. The variance with (-) sign denotes the unfavorable deviations in the above exhibit. Some of the potential risk identified is a possible case of surplus or deficit unit production. Another imminent risk is failure to completely cover the overhead costs. These variances occur due to less focus on the prediction of the future conditions. A possible way forward is to predict possible changes and include a certain margin to cover for any uncertain unfavorable variance. The organization can implement the use of linear programming or regression analysis to establish an inclusive variable prediction (Berger,