Question
Reid Shaw Company produces one product, a putter called GO-Putter. Shaw uses a standard cost system and determines that it should take one hour of
Reid Shaw Company produces one product, a putter called GO-Putter. Shaw uses a standard cost system and determines that it should take one hour of direct labor to produce one GO-Putter. The normal production capacity for this putter is 101,400 units per year. The total budgeted overhead at normal capacity is $883,194 comprised of $248,430 of variable costs and $634,764 of fixed costs. Shaw applies overhead on the basis of direct labor hours.
During the current year, Shaw produced 84,300 putters, worked 88,300 direct labor hours, and incurred variable overhead costs of $181,500 and fixed overhead costs of $617,653.
Compute the predetermined variable overhead rate and the predetermined fixed overhead rate. (Round answers to 2 decimal places, e.g. 2.25.)
Predetermined variable overhead rate $
Predetermined fixed overhead rate $
Compute the applied overhead for Shaw for the year.
$
Compute the total overhead variance.
$
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