Primara Corporation has a standard cost system in which it applies overhead to p

Question

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:

Compute the fixed portion of the predetermined overhead rate for the year. (Round Fixed portion of the predetermined overhead rate to 2 decimal places

Compute the fixed overhead budget variance and volume variance. (Round Fixed portion of the predetermined overhead rate to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.))

please show work

  Total budgeted fixed overhead cost for the year $446,400   Actual fixed overhead cost for the year $440,000   Budgeted standard direct labor-hours (denominator level of activity) 62,000   Actual direct labor-hours 63,000   Standard direct labor-hours allowed for the actual output 60,000

Explanation / Answer

Fixed overhead $ 446,400 Denominator level of activity 62000 Fixed portion of the predetermined overhead rate $ 7.20 per DLH Budget Variance Actual fixed overhead cost for the year $ 440,000 Budgeted fixed overhead cost $ 446,400 Budget variance $ -6,400 F Volume Variance Fixed portion of the predetermined overhead rate $ 7.20 per DLH Denominator hours 62000 DLHs Standard hours allowed 60000 DLHs            Volume variance $ 14,400.00 U (62000-6000)*7.20 = 14400

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