Answered

At Westonci.ca, we make it easy to get the answers you need from a community of informed and experienced contributors. Get quick and reliable answers to your questions from a dedicated community of professionals on our platform. Join our Q&A platform to connect with experts dedicated to providing accurate answers to your questions in various fields.

Primara Corporation has a standard cost system in which it applies overhead to products based on the standard direct labor-hours allowed for the actual output of the period. Data concerning the most recent year appear below:

Total budgeted fixed overhead cost for the year $250,000
Actual fixed overhead cost for the year $254,000
Budgeted direct labor-hours (denominator level of activity) 25,000
Actual direct labor-hours 27,000
Standard direct labor-hours allowed for the actual output 26,000

Required:
a. Compute the fixed portion of the predetermined overhead rate for the year.
b. Compute the fixed overhead budget variance and volume variance.

Sagot :

Tundexi

Answer:

1. Predetermined overhead rate = Total fixed overhead cost year / Budgeted standard direct labor hours

Predetermined overhead rate = $250,000 / 25,000

Predetermined overhead rate = $10.00 per direct labor hour

2. Fixed overhead budget variance = Actual fixed overhead - Budgeted fixed overhead

Fixed overhead budget variance = $254,000 - $250,000

Fixed overhead budget variance = $4,000 (Unfavorable)

Fixed overhead volume variance = Budgeted fixed overhead - [Fixed overhead applied to work in process]

Fixed overhead volume variance = $250,000 - (26,000*$10)

Fixed overhead volume variance = $250,000 - $260,000

Fixed overhead volume variance = $10,000 (Favorable)

Your visit means a lot to us. Don't hesitate to return for more reliable answers to any questions you may have. Thanks for stopping by. We strive to provide the best answers for all your questions. See you again soon. Find reliable answers at Westonci.ca. Visit us again for the latest updates and expert advice.