P15-18 Variable and fixed overhead variances-various issues [LO 5, 6]

Presented here are the original overhead budget and the actual costs incurred during July for Rembrant, Inc. Rembrant's managers relate overhead to direct labor hours for planning, control, and product costing purposes. The original budget is based on budgeted production of 30,000 units in 6,000 standard direct labor hours. Actual production of 32,400 units required 6,750 actual direct labor hours.

	Original Budget				Actual Costs
Variable overhead		$	45,000			$	50,700
Fixed overhead			54,000				56,400

Required:

(a)	Calculate the flexed budget allowances for variable and fixed overhead for July. (Do not round intermediate calculations. Omit the "$" sign in your response.)

	Flexed budget
Variable flexed Budget	$
Fixed flexed Budget	$

(b)	Calculate the direct labor efficiency variance for July expressed in terms of direct labor hours. (Input the amount as positive value. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

Direct labor efficiency variance

(c)	Calculate the predetermined overhead application rate for both variable and fixed overhead for July. (Round your answer to 2 decimal places. Omit the "$" sign in your response.)

	Variable	Fixed
Predetermined overhead application rate per hour	$	$

(d)	Calculate the fixed and variable overhead applied to production during July if overhead is applied on the basis of standard hours allowed for actual production achieved. (Round your intermediate calculations to 2 decimal places. Omit the "$" sign in your response.)

	Variable				Fixed
Overhead applied		$				$

(e)

Calculate the fixed overhead budget and volume variances for July. (Input the amount as positive value. Round your intermediate calculations to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Fixed overhead Budget variance	$
Fixed overhead Volume variance	$

(f)	Calculate the over- or underapplied fixed overhead for July. (Input the amount as positive value. Omit the "$" sign in your response.)

fixed overhead

$