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HOW DO I CALCULATE? World Company expects to operate at 60% of its productive capacity of 32,000 units per month. At this planned level, the
HOW DO I CALCULATE?
World Company expects to operate at 60% of its productive capacity of 32,000 units per month. At this planned level, the company expects to use 12,000 standard hours of direct labor. Overhead is allocated to products using a predetermined standard rate of 0.625 direct labor hour per unit. At the 60% capacity level, the total budgeted cost includes $36,000 fixed overhead cost and $120,000 variable overhead cost. In the current month, the company incurred $116,000 actual overhead and 5,760 actual labor hours while producing 9,400 units. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance. 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 9,400 units -- Standard Overhead costs Fav./Unf. Variance Actual results DL Hours applied Variable overhead costs Fixed overhead costs Total overhead costsStep by Step Solution
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