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HOW DO I CALCULATE? Sedona Company set the following standard costs for one unit of its product for this year. Direct material (30 Ibs. $2.20
HOW DO I CALCULATE?
Sedona Company set the following standard costs for one unit of its product for this year. Direct material (30 Ibs. $2.20 per Ib.) Direct labor (20 hrs. $4.20 per hr.) Variable overhead (20 hrs. $2.20 per hr.) Fixed overhead (20 hrs. 8 $1.10 per hr.) $66.00 84.00 44.00 22.00 $216.00 Total standard cost The $3.30 ($2.20 $1.10) total overhead rate per direct labor hour is based on an expected operating level equal to 60% of the factory's capacity of 68,000 units per month. The following monthly flexible budget information is also available. Operating Levels (% of capacity) Flexible Budget Budgeted output (units) Budgeted labor (standard hours) Budgeted overhead (dollars) 55 60% 65 40,800 816,000 37,400 748,000 44,200 884,000 Variable overhead $1,645,600 897,600 $1,795,200 897,600 $1,944,800 897,600 Fixed overhead $2,543,200 $2,692,800 $2,842,400 Total overhead During the current month, the company operated at 55% of capacity, employees worked 728,000 hours, and the following actual overhead costs were incurred. Variable overhead costs $1,625,000 Fixed overhead costs 924,300 $2,549,300 Total overhead costs (1) Compute the predetermined overhead application rate per hour for total overhead, variable overhead, and fixed overhead. Predetermined OH Rate Variable overhead costs Fixed overhead costs Total overhead costs (2) Compute the total variable and total fixed overhead variances and classify each as favorable or unfavorable. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance. Round "Rate per hour" answers to 2 decimal places.) At 55% of Operating Capacity- Standard DL Overhead Costs Actual Results Variance Fav./Unf. Hours Applied Variable overhead costs Fixed overhead costs Total overhead costsStep by Step Solution
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