Question

Exercise 24-12 Byrd Company produces one product, a putter called GO-Putter. Byrd 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 $525,000 of fixed costs. Byrd applies overhead on the basis of direct labor hours. 105,000 units per year. The total budgeted overhead at normal capacity is $945,000 comprised of $420,000 of variable costs and During the current year, Byrd produced 80,100 putters, worked 83,600 direct labor hours, and incurred variable overhead costs of $144,180 and fixed overhead costs of $660,900. Compute the predetermined variable overhead rate and the predetermined fixed overhead rate. (Round answers to 2 decimal places, e.g. 2.75.) Variable Fixed Predetermined Overhead Rate LINK TO TEXT LINK TO VIDEO Compute the applied overhead for Byrd for the year. Overhead Applied LINK TO VIDEO LINK TO TEXT Compute the total overhead variance. Total Overhead Variance

Answer 1

1) Predetermine overhead rate

	Variable	Fixed
Predetermine overhead rate	420000/105000 = 4 per labor hour	525000/105000 = 5 per labor hour

2) Overhead applied = 80100*1*9 = 720900

3) Actual overhead = 805080

Total overhead variance = (805080-720900) = 84180 Unfavorable