E7-14. Calculating Factory Overhead

The normal capacity of a factory is 10,000 units per month. Cost and production data follow:

Calculate the amount of factory overhead allowed for the actual volume of production each month and the variance between budgeted and actual overhead for each month.

Standard application rate for fixed overhead. $1.00 per unit Standard application rate for variable overhead $2.00 per unit Production-Month 1 9,500 units Production-Month 2. 11,000 units Actual factory overhead-Month 1 $30,500 Actual factory overhead-Month 2 $31,750