In all of the exercises involving variances, use “F” and “U” to designate favorable and unfavorable variances, respectively.
Calculating amount of factory overhead applied to work in process
The overhead application rate for a company is $2.50 per unit, made up of $1.00 for fixed overhead and $1.50 for variable overhead. Normal capacity is 10,000 units. In one month, there was an unfavorable controllable variance of $200. Actual overhead for the month was $27,000. What was the amount of the budgeted overhead for the actual level of production?
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