E 8-16 Determining Budgeted Overhead The overhead application rate for a company is $10 per unit, made up of $6 per unit of fixed overhead and $4 per unit of variable over- head. Normal capacity is 10,000 units. In one month there was a favorable flexible budget variance of $2,500. Actual overhead for the month was $110,000 and actual units produced were 13,125. Based on this information, determine the amount of the budgeted overhead for the actual level of production.

Use this format:

VanDerbeck, Chapter 08 297 E8-16 a. and b. Actual factory overhead Budget based on standard hours Standard hours x standard rate Fixed costs ...... $ 52,000 Fixed cost: 9.000 units X 2 hr x $4/unit = $50.000 x $4/ 10,000 x $5.00 Variable costs .... 28,500 Variable cost: 9.000 x $3.00 = 27.000 $ 80,500 $ 77.000 $ 72,000 Flexible-Budget Variance Production-Volume Variance (a) $3,500 (U) (b) $5,000 (U) Net Factory Overhead Variance $8.500 (U) Actual factory overhead (total) ............. $ 80.500 Applied factory overhead (18,000 hours x $4) Underapplied factory overhead $ 8.500 Net variance: Flexible-budget variance (U) $ Production-volume variance (U) Net variance (U).... $ 8.500 E8-17 a. and b. Actual factory overhead Budget based on standard hours Standard hours x standard rate Fixed costs ...... $103,000 Fixed cost: 11.000 units x $15 /unit = / 10.000 x $10.00 $100,000 Variable costs .... 48.000 Variable cost: 11,000 x $5.00 = 55.000 $ 151,000 $ 155,000 $165,000 Flexible-Budget Variance Production Volume Variance (a)$4,000(F) (b) $10,000 (F) Net Factory Overhead Variance $14.000 (F) Actual factory overhead (total) $151.000 Applied factory overhead Overrapplied factory overhead $14.000 C. 2013 Cengage Learning. All Rights Reserved. May not be nennncci, copied or duplicated, or posted to a publicly accessible website, in whole or in part