Question

World Company expects to operate at 80% of its productive capacity of 50,000 units per month. At this planned level, the company expects to use 25,000 standard hours of direct labor. Overhead is allocated to products using a predetermined standard rate based on direct labor hours. At the 80% capacity level, the total budgeted cost includes $ 50,000 fixed overhead cost and $ 275,000 variable overhead cost. In the current month, the company incurred $ 305,000 actual overhead and 22,000 actual labor hours while producing 35,000 units.
(1) Compute the overhead application rate for total overhead.
(2) Compute the total overhead variance.



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  • CreatedNovember 29, 2013
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