Question

Sedona Company set the following standard costs for one unit of its product for this year. Ship Direct material (20 Ibs. @ $3.30 per Ib.) Direct labor (15 hrs. @ $6.00 per hr.) Variable overhead (15 hrs. @ $2.80 per hr.) Fixed overhead (15 hrs. @ $1.20 per hr.) Total standard cost $ 66.00 90.00 42.00 18.00 $216.00 The $4.00 ($2.80 + $1.20) total overhead rate per direct labor hour is based on an expected operating level equal to 75% of the factory's capacity of 58,000 units per month. The following monthly flexible budget information is also available. Operating Levels (% of capacity) 70% 75% 80% 40,600 43,500 46,400 609,000 652,500 696,000 Flexible Budget Budgeted output (units) Budgeted labor (standard hours) Budgeted overhead (dollars) Variable overhead Fixed overhead Total overhead $1,705,200 783,000 $2,488,200 $1,827,000 783,000 $2,610,000 $1,948,800 783,000 $2,731,800 During the current month, the company operated at 70% of capacity, employees worked 575,000 hours, and the following actual overhead costs were incurred. Variable overhead costs Fixed overhead costs Total overhead costs $1,624,000 866,000 $2,490,000

Answer 1

Predetermined OH Rate Variable Overhead costs $ 2.86 Per DL hr Per DL hr. Fixed overhead costs & Total overhead costs & 1.20 4.00 Per Dl hr. -A+70°). ef Operating Capau'ty- Puedetermi Standard Overhead Actual -ned or DL How costs Results Rate Appued Variable overhead.costs $ 2.80 609,000 $1,105,200 $1,624,000 $81,200 favorable Restilte variance favolent Fixed overhead coats o 1.20 60 9,000 $ 730,800 $ 866,000 4135, 200 Unfavorable Total overhead costs / $ 4.00 $2,436, doo $2,490,000 $216,400 Unfavorable Calculation: Overhead costs Applied: Variable overhead costs = = Fixed overhead casts = $2.80 X 609,ODO $ 1,105,200 $ 1.20 X 609,000 $ 730,800 Varance avulable overhead costs = Overhead costs applicet - Actual.. Results - $1,705,200 - $1,624,000 & 81,200 fixed Overhead costs = Overhead costs applied - Actual Results = $ 730,800 - + 866,000 $ 135,200