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 120,000 units per year. The
total budgeted overhead at normal capacity is $720,000 comprised of
$240,000 of variable costs and $480,000 of fixed costs. Byrd
applies overhead on the basis of direct labor hours.
During the current year, Byrd produced 77,100 putters, worked
88,600 direct labor hours, and incurred variable overhead costs of
$138,780 and fixed overhead costs of $407,600.
A) Compute the predetermined variable overhead rate and the predetermined fixed overhead rate for fixed and variable cost
B) Compute the applied overhead for Byrd for the year Overhead Applied overhead rate for fixed and variable
C) Compute the total overhead variance Total Overhead Variance
D) FavorableUnfavorableNeither favorable nor unfavorable
A)
Predetermined variable overhead rate = Budgeted variable overhead costs/Budgeted direct labor hours
= 240,000/120,000
= $2 per direct labor hour
Predetermined fixed overhead rate = Budgeted variable overhead costs/Budgeted direct labor hours
= 480,000/120,000
= $4 per direct labor hour
B)
Variable Overhead applied = Predetermined variable overhead rate x Actual direct labor hours
= 2 x 88,600
= $177,200
Fixed Overhead applied = Predetermined fixed overhead rate x Actual direct labor hours
= 4 x 88,600
= $354,400
Total Overhead applied = Variable Overhead applied + Fixed Overhead applied
= $177,200 + $354,400
= $531,600
C)
Actual variable overhead costs = $138,780
Actual fixed overhead costs = $407,600
Total actual overhead costs = Actual variable overhead costs + Actual fixed overhead costs
= $138,780 + $407,600
= $546,380
Total Overhead Variance = Total actual overhead costs - Total Overhead applied
= $546,380 - $531,600
= $14,780
D)
Total Overhead Variance is Unfavorable
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Byrd Company produces one product, a putter called GO-Putter. Byrd uses a standard cost system and...
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