Question

mework 0 Help Save & Exit Submit Check my work Exercise 21-19 Computing total overhead rate and total overhead variance LO P4 World Company expects to operate at 60% of its productive capacity of 28,000 units per month. At this planned level, the company expects to use 7,560 standard hours of direct labor. Overhead is allocated to products using a predetermined standard rate of 0.450 direct labor hour per unit. At the 60% capacity level, the total budgeted cost includes $22,680 fixed overhead cost and $60,480 variable overhead cost. In the current month, the company incurred $63,920 actual overhead and 7,130 actual labor hours while producing 11,600 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.) (1) Compute the predetermined standard overhead rate for total overhead, Predetermined OH rate Variable overhead costs Fixed overhead costs Total overhead costs (2) Compute the total overhead variance. production 11,600 units - Standard DL Hours Overhead costs applied Actual results Variance Fav./Unf. Prev 4 of 5 !! Next >

Answer 1

1
	Predetermined OH rate
Variable overhead costs	8	=60480/7560
Fixed overhead costs	3	=22680/7560
Total overhead costs	11
2
			Actual production 11600 units
		Standard DL hours	Overhead costs applied	Actual results	Variance	Fav./Unf.
Variable overhead costs	8	5220	41760
Fixed overhead costs	3	5220	15660
Total overhead costs			57420	63920	6500	Unfavorable
Workings:
Standard DL hours	5220	=11600*0.450