Question

Check my work 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: $ 446,400 $ 440,000 Total budgeted fixed overhead cost for the year Actual fixed overhead cost for the year Budgeted direct labor-hours (denominator level of activity 62,000 63,000 60,000 Actual direct labor-hours Standard direct labor-hours allowed for the actual output Required: 1. Compute the fixed portion of the predetermined overhead rate for the year. (Round Fixed portion of the predetermined overhead rate to 2 decimal places.) 2. Compute the fixed overhead budget variance and volume variance. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.). Input all amounts as positive values.) 1. Fixed portion of the predetermined overhead rate per DLH 2. Budget variance Volume variance

Answer 1

1.

Fixed portion of the predetermined overhead rate

$7.20 DLH

2.

Budget Variance

$6,400

Favorable

Volume Variance

$21,600.00

Unfavorable

Working:

Answer 1
Fixed Overhead	$446,400
Budgeted standard direct labor hours	62000
Fixed portion of the predetermined overhead rate	$7.20
Answer 2
	Budget Variance
Actual Fixed overhead cost for the year	$440,000
Budgeted fixed overhead cost	$446,400
Budget Variance	($6,400)	Favorable
	Volume Variance
Fixed portion of the predetermined overhead rate	$7.20	Per DLH
Denominator hours	63000	DLHs
Standard hours allowed	60000	DLHs
Volume Variance	($21,600.00)	Unfavorable