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In October, Sunland Company reports 20,400 actual direct labor hours, and it incurs $181,600 of manufacturing overhead costs.

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Answer #1

Solution:

Fixed Overhead application rate = $8.15 - $6.65 = $1.50 per direct labor hour

Fixed overhead applied = $1.50 *22700 = $34,050

Budgeted Fixed Overhead = $50,750

Overhead volume variance = Fixed overhead applied - Budgeted Fixed Overhead = $34,050 - $50,750 = $16,700 Unfavorable

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