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HELP NOW DUE IN 30 MIN Multiple Choice Question 137 The predetermined overhead rate for Waterway...

HELP NOW DUE IN 30 MIN

Multiple Choice Question 137 The predetermined overhead rate for Waterway Industries is $5, comprised of a variable overhead rate of $3 and a fixed rate of $2. The amount of budgeted overhead costs at normal capacity of $150000 was divided by normal capacity of 30000 direct labor hours, to arrive at the predetermined overhead rate of $5. Actual overhead for June was $13948 variable and $8800 fixed, and standard hours allowed for the product produced in June was 4400 hours. The total overhead variance is $4400 U. $4400 F. $748 F. $748 U. I am just confused on unfavorable and favorable could you in depth explain that

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Answer #1

Answer- The total overhead variance is =$748 U.

Explanation- Total overhead variance = Standard overhead costs –Actual Overhead costs

=$22000- ($13948+$8800)

= $22000-$22748

= $748 Unfavorable

Where-

Standard overhead costs = Standard hours allowed for actual production* Predetermined overhead rate

= 4400 hours*$5 per hour

= $22000

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