Hyteck, Inc. is a capital intensive firm. Indirect costs make up nearly 70% of t
ID: 2460671 • Letter: H
Question
Hyteck, Inc. is a capital intensive firm. Indirect costs make up nearly 70% of the product costs. The company has no direct material costs because customers provide the direct materials used for each job. To plan and control such costs, the firm employs flexible budgets and standard costs. Overhead rates, based on direct labor hours, are derived from the master budget.
Master Actual
Budget Results
Units produced 2,000 1,820
Direct labor hours 10,000 9,200
Fixed overhead $100,000 $98,000
Variable overhead $160,000 $150,000
Direct labor $100,000 $90,000
I need help finding the fixed overhead production volume variance.
the formula I have is (SQA x SR) - Estimated Fixed Costs
so... ( some number x 1820 x 10) - 100,000
I need help finding that number and understanding the process for finding Standard quantity allowed
The 10 is SR = 100000,10000
Thanks!
Explanation / Answer
Standard hours allowed for actual production
first calculated budgeted hours per unit
2000 units budgeted require 10,000 hours
so 1 unit required = 10,000/2000 = 5 hours per unit
Now calucated standard hours allowed for actual production
= 5 *1,820 = 9,100 hours
s0 9,100 * 10 - 100,000 = 9,000(U)
Standard hours allowed for actual production
first calculated budgeted hours per unit
2000 units budgeted require 10,000 hours
so 1 unit required = 10,000/2000 = 5 hours per unit
Now calucated standard hours allowed for actual production
= 5 *1,820 = 9,100 hours
s0 9,100 * 10 - 100,000 = 9,000(U)
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