Question
World Company expects to operate at 70% of its productive capacity of 20,000 units per month. At this planned level, the company expects to use
World Company expects to operate at 70% of its productive capacity of 20,000 units per month. At this planned level, the company expects to use 11,550 standard hours of direct labor. Overhead is allocated to products using a predetermined standard rate of 0.825 direct labor hour per unit. At the 70% capacity level, the total budgeted cost includes $23,100 fixed overhead cost and $138,600 variable overhead cost. In the current month, the company incurred $135,860 actual overhead and 7,180 actual labor hours while producing 11,200 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.)
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