Byrd Company produces one product, a putter called GO-Putter. Byrd uses a standa
ID: 2493721 • 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 120,000 units per year. The total budgeted overhead at normal capacity is $720,000 comprised of $240,000 of variable costs and $480,000 of fixed costs. Byrd applies overhead on the basis of direct labor hours.
During the current year, Byrd produced 88,900 putters, worked 93,200 direct labor hours, and incurred variable overhead costs of $123,749 and fixed overhead costs of $460,741.
1. Compute the applied overhead for Byrd for the year.
2. Compute the total overhead variance.
Explanation / Answer
Budgeted Data Byrd Company Output in units 120000 Varriable overheads $240,000 Fixed Overheads $480,000 budgeted labour hours per unit is 1/hour Budgeted labour rate per unit $1 Total number of budged hours is 120000 hours Total budgeted labour cost $120,000 Variable overheads absorption rate per hour $2 Fixed overhead aborption rate per hour $4 Standard cost per unit Variable overhead rate @ $2 per labour hour $2 Fixed overhead rate @ $4 per labour hour $4 Actual Data Output in units 88900 Varriable overheads $123,749 Fixed Overheads $460,741 Total labour hours 93200 Variances Budgeded variable overhead $186,400 Acutal variable overhead $123,749 Variable Overhead expenditure variance (Fav) $62,651 Budgeded hours for actual ouput (in hours) 88900 Acutal hours spend(in hours) 93200 Hours extra taken 4300 Variable overhead efficiency variance(Adv) $8,600 Fixed overhead Variances Fixed overhead expenditure variance (Fav) $19,259 Fixed overhead volume Variance 31100 (Budgeted-actualoutput) * Std fixed oh cost(adv) $124,400 Total Fixed OH Variance (Adverse) ($105,141) Alternatively Fixed overhead Variance (actual prodn*std fixed cost per unit)- actual fixed oH ($105,141)
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