5. Factory Overhead Rates and Variances on Various Capacity Levels. The accountant of the Cordell Manufacturing...

 

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5. Factory Overhead Rates and Variances on Various Capacity Levels. The accountant of the Cordell Manufacturing Company is asked by his management to compute factory overhead rates based on (a) normal capacity, (b) expected actual capacity, (c) practical capacity, and (d) average sales for the previous three years. The accountant prepared the following summary: Capacity levels....... Direct labor hours...... Factory overhead: Fixed factory overhead......... Variable factory overhead..... Total.... Expected Average Normal Practical Actual Sales Capacity Capacity 80% 27,200 85% 28,900 90% 30,600 100% 34,000 $102,000 $102,000 $102,000 $102,000 136,000 144,500 153,000 170,000 $255,000 $272,000 $238,000 $246,500 Required: (1) Factory overhead rates for each of the four capacity levels. (Make calculations to two decimal places only.) (2) The amount of over- or underabsorbed factory overhead for the other three levels if actual hours worked and actual factory overhead incurred were identical with the estimated hours and the estimated overhead of the expected actual capacity level. 5. Factory Overhead Rates and Variances on Various Capacity Levels. The accountant of the Cordell Manufacturing Company is asked by his management to compute factory overhead rates based on (a) normal capacity, (b) expected actual capacity, (c) practical capacity, and (d) average sales for the previous three years. The accountant prepared the following summary: Capacity levels....... Direct labor hours...... Factory overhead: Fixed factory overhead......... Variable factory overhead..... Total.... Expected Average Normal Practical Actual Sales Capacity Capacity 80% 27,200 85% 28,900 90% 30,600 100% 34,000 $102,000 $102,000 $102,000 $102,000 136,000 144,500 153,000 170,000 $255,000 $272,000 $238,000 $246,500 Required: (1) Factory overhead rates for each of the four capacity levels. (Make calculations to two decimal places only.) (2) The amount of over- or underabsorbed factory overhead for the other three levels if actual hours worked and actual factory overhead incurred were identical with the estimated hours and the estimated overhead of the expected actual capacity level.