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

Question

Privack 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: Budgeted variable overhead cost per direct labor-hour Total budgeted fixed overhead cost per year Budgeted direct labor-hours (denominator level of activity) Actual direct labor-hours Standard direct labor-hours allowed for the actual output $4.50 $563,213 59,286 82,000 82,000 Required 1. Compute the predetermined overhead rate for the year. Be sure to include the total budgeted fixed overhead and the total budgeted variable overhead in the numerator of your rate. (Round your answer to the nearest whole dollar amount.) 2. Compute the amount of overhead that would be applied to the output of the period. (Round your intermediate calculations and final answer to the nearest whole dollar amount.) 1. Predetermined overhead rate per DLH 2. Overhead applied

Explanation / Answer

REq1: Pre-determined OH rate: Fixed oH rate per DLH: Budgeted Fixed OH/ Budgeted DLH $ 563,213 / 59,286 DLH = $ 9.50 per DLH Fixed OH rate er DLH: 9.5 Variable OH rate per DLH: 4.5 Pre-determined OH rate 14 Req 2: Overhead applied during the year: Actual labour hours worked: 82000 Pre-determined OH rate: 14 Overheads applied: 1148000

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