Question
EXERCISE 10A3 Applying Overhead in a Standard Costing System LO104 Privack Corporation has a standard cost system in which it applies overhead to products based
EXERCISE 10A3 Applying Overhead in a Standard Costing System LO104 Privack 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:
Budgeted variable overhead cost per direct labor-hour . . . . . . . . . . $2
Total budgeted fixed overhead cost per year . . . . . . . . . . . . . . . . . . . $250,000
Budgeted direct labor-hours (denominator level of activity) . . . . . . . 40,000
Actual direct labor-hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,000
Standard direct labor-hours allowed for the actual output . . . . . . . . 38,000
Required: 1. Compute the predetermined overhead rate for the year. Be sure to include the total budgeted fixed overhead and the total budgeted variable overhead in the numerator of your rate. 2. Compute the amount of overhead that would be applied to the output of the period.
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