Fixed Overhead Rate, Denominator Level, and Two-Variance Analysis Overhead information for Danielson Company for October follows:
Total overhead incurred | $28,800 |
Budgeted fixed overhead | $7,200 |
Total standard overhead rate per machine hour (MH) | $4.50 |
Standard variable overhead rate per MH | $3.00 |
Standard MHs allowed for the units manufactured | 3,500 |
Required
1. What is the standard fixed factory overhead rate per machine hour?
2. What is the denominator activity level that was used to establish the fixed overhead application note?
3. Prepare a diagram such as the one in Exhibit 15.7, Panel 3, to calculate the following overhead variances for October:
a. Total flexible-budget variance for factory overhead.
b. Factory overhead production-volume variance.
c. Total factory overhead variance.
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