Byrd company produces one product a putter called GO-PUTTER Byrd uses a standard
ID: 2425134 • Letter: B
Question
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 100,000 units per year. The total budgeted overhead at normal capacity is 850,000 comprised of 250,000 of variable cost and 600,000 on fixed costs. Byrd applies overhead on the basis of direct labor hours. During the current year Byrd produced 95,000 putters worked 94,000 direct labor hours and incurred variable overhead cost of 256,000 and fixed overhead cost 600,000.
a)compute the predetermined variable overhead rate and the predetermined fixed overhead rate
b) compute the applied overhead for Byrd for the year.
c) Compute the total overhead variance
Explanation / Answer
Product Ggo Putter BYRD 1 unit to take 1 labour hour Normal capacity per year 100000 units The total budgeted overhead at normal capacity 850000 Variable overhead 250000 Fixed overhead 600000 Actual Data for the year: Total units produced 95000 Units Actual labour hours 94000 hours Variable overhead cost 256000 Fixed overhead 600000 a)compute the predetermined variable overhead rate and the predetermined fixed overhead rate Predetermined variable overhead rate 250000/100000 2.50 per unit Predetermined Fixed overhead rate 600000/100000 6.00 per unit b) compute the applied overhead for Byrd for the year. Variable Over Head Applied 95000 * 2.5 237500 Fixed Over Head Applied 95000 * 6.00 570000 Applied Over head 807500 c) Compute the total overhead variance Overhead should be for 95000 Units- Actual OH cost ((95000*2.50)+600000) - 856000 (187500+600000) - 856000 -68500 Adverse
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