Hugland Company budgets its factory overhead on the basis of a normal activity of 100,000 standard direct
Question:
Hugland Company budgets its factory overhead on the basis of a normal activity of 100,000 standard direct labor hours (DLH) per year. It estimates that its variable factory overhead is $4 per DLH and its fixed factory overhead is $600,000 per year. Hugland applies its factory overhead using a predetermined rate based on the preceding informa- tion. Hugland has a direct labor quantity standard of 2 hours per unit of product. During the current year, Hugland produced 48,000 units of product and incurred actual factory overhead costs of $990,000.
Required: Compute Hugland’s (1) predetermined overhead rate, (2) total overhead vari- ance, (3) overhead budget variance, and (4) fixed overhead volume variance.
TKY-1
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Accounting Information For Business Decisions
ISBN: 9780030224294
1st Edition
Authors: Billie Cunningham, Loren A. Nikolai, John Bazley