Question

EXERCISE 10A-1 Fixed Overhead Variances L010-4 Appendix 10A: Exercises and Probler primara Corporation has a standard cost system in which it applies overhead to products based on the standard direct labor-hours allowed for the actual output of the period. Data concerning the most recent year appear below: Total budgeted fixed overhead cost for the year. Actual fixed overhead cost for the year... Budgeted direct labor-hours (denominator level of activity) Actual direct labor-hours. Standard direct labor-hours allowed for the actual output $250.000 $254,000 25,000 27,000 26,000 Required: 1. Compute the fixed portion of the predetermined overhead rate for the year. 2. Compute the fixed overhead budget variance and volume variance. 149 in A

Answer 1

PRIMARA CORPORATION
		AMOUNT($)
A	Budgeted Fixed Overhead cost	2,50,000.00
B	Budgeted DLHs	25,000.00
C = A/B	Fixed Portion of the predetermined Overhead rate	10.00	per DLH Answer
D	Actual Fixed Overhead	2,54,000.00
E = A - D	Budget Variance	-4,000.00	Unfavourable, Answer
F	Standard DLH allowed	26,000.00
G = F x C	Standard Fixed Overhead	2,60,000.00
H = A - G	Volume Variance	-10,000.00	Unfavourable, Answer