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Exercise 21-19 Computation of total overhead rate and total overhead variance LO P3 World Company expects to operate at 70% of its productive capacity of
Exercise 21-19 Computation of total overhead rate and total overhead variance LO P3 World Company expects to operate at 70% of its productive capacity of 20,000 units per month. At this planned level, the company expects to use 11,550 standard hours of direct labor. Overhead is allocated to products using a predetermined standard rate of 0.825 direct labor hours per unit. At the 70% capacity level, the total budgeted cost includes $23,100 fixed overhead cost and $138,600 variable overhead cost. In the current month, the company incurred $135,860 actual overhead and 7,180 actual labor hours while producing 11,200 units. (Do not round intermediate calculations. Round "OH costs per DL hour" to 2 decimal places.) (1) Compute the predetermined standard overhead rate for total overhead Predetermined OH rate Variable overhead costs Fixed overhead costs Total overhead costs (2) Compute the total overhead variance. Actual production 11,200 units Standard DL Hours Overhead costs applied Actual results Variance Fav./Unf. Variable overhead costs Fixed overhead costs Total overhead costs
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