Farmer Inc. makes clocks. The fixed overhead costs for 2015 total $880,000. The company uses direct labor-hours
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Question:
Farmer Inc. makes clocks. The fixed overhead costs for 2015 total $880,000. The company uses direct labor-hours for fixed overhead allocation and anticipates 220,000 hours during the year for 330,000 units. An equal number of units are budgeted for each month.
During June, 32,000 clocks were produced and $72,000 was spent on fixed overhead.
Required:
a. Determine the fixed overhead rate for 2015 based on units of input.
b. Determine the fixed overhead static-budget variance for June.
c. Determine the production-volume overhead variance for June.
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