Question
EXERCISE 10A1 Fixed Overhead Variances LO104 Primara Corporation has a standard cost system in which it applies overhead to products based on the standard direct
EXERCISE 10A1 Fixed Overhead Variances LO104 Primara Corporation has a standard cost system in which it applies overhead to products based on the standard direct labor-hours allowed for the actual output of the period. Data concerning the most recent year appear below:
Total budgeted fixed overhead cost for the year . . . . . . . . . . . . . . . . $250,000 Actual fixed overhead cost for the year . . . . . . . . . . . . . . . . . . . . . . . . $254,000 Budgeted direct labor-hours (denominator level of activity) . . . . . . . 25,000 Actual direct labor-hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,000 Standard direct labor-hours allowed for the actual output . . . . . . . . 26,000
Required: 1. Compute the fixed portion of the predetermined overhead rate for the year. 2. Compute the fixed overhead budget variance and volume variance.
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