Question
Starling Company, which allocates overhead to production on the basis of machine hours, reported the following data for the period just ended: Actual units produced:
Starling Company, which allocates overhead to production on the basis of machine hours, reported the following data for the period just ended:
Actual units produced: 12,000 Actual fixed overhead incurred: $700,000 Actual machine hours worked: 60,000 Budgeted fixed overhead: $720,000 (numerator) Budgeted level of machine-hour activity: 50,000 (denominator) Starling estimates that it takes four hours to manufacture a completed unit.
Compute all standards & variances. You must compute the FOH rate.
Prepare all journal entries using standard costing. Hint: You must compute over or underallocated FOH. SHOW ALL COMPUTATIONS.
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