Question

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 is 145,000 units per year. The total budgeted overhead at normal capacity is $942,500 comprised of $290,000 of variable costs and $652,500 of fixed costs. Byrd applies overhead on the basis of direct labor hours. During the current year, Byrd produced 81,600 putters, worked 87,300 direct labor hours, and incurred variable overhead costs of $159,120 and fixed overhead costs of $471,400. 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 $ e Textbook and Media Compute the applied overhead for Byrd for the year. Overhead Applied $

Answer 1

Requirement 1 Computation of pre-determined OH rate Variable Fixed Budgeted OH at normal capacity (A) $ 290,000 $ 652,500 Normal capacity (in DLH) (B) 145000 145000 (145000/1) Pre-determined OH rate (A/B) $ 2.00 $ 4.50 (290000/145000) (652500/145000) Requirement 2 Actual output Standard hours (81600*1) (Actual output*Standard hr pu) 81600 81600 Applied Variable OH (81600*2) Applied Fixed OH (81600*4.50) Overhead applied (163200+367200) $ $ $ 163,200 367,200 530,400 Note- Variable OH and Fixed OH are applied on the basis of standard hours worked. Requirement 3 Actual Overhead (159120+471400) Less-Overhead applied Overhead variance $ $ $ 630,520 (530,400) 100,120 Unfavorable