Refer to the information for Rostand Inc. above. Assume that the actual fixed overhead was $ 403,400. Budgeted fixed overhead was $ 400,000, based on practical capacity of 32,000 direct labor hours.
Rostand Inc. operates a delivery service for over 70 restaurants. The corporation has a fleet of vehicles and has invested in a sophisticated, computerized communications system to coordinate its deliveries. Rostand has gathered the following actual data on last year’s delivery operations:
Deliveries made ..........38,600
Direct labor .............31,000 direct labor hours @ $ 9.00
Actual variable overhead ........$ 157,700
Rostand employs a standard costing system.
During the year, a variable overhead rate of $ 5.10 per hour was used. The labor standard requires 0.80 hour per delivery.
Required:
1. Calculate the standard fixed overhead rate based on budgeted fixed overhead and practical capacity.
2. Compute the fixed overhead spending and volume variances.