Zotta Enterprises makes a single product called a \"gower\" in its Doxville faci

Question

Zotta Enterprises makes a single product called a "gower" in its Doxville facilities. The company uses standard costing and applies overhead cost to products on a basis of direct labor hours. Budgeted and actual data relating to 1999 follow: Actual fixed factory overhead cost, $38,900 Denominator hours, 20,000 Standard hours allowed for one gower, 1.2 hours Gowers produced during the year, 17,000 units Fixed overhead budget variance, $1,300 U 1. The budgeted fixed factory overhead cost for 1999 would be 2. The standard direct labor hours allowed for 1999's production of gowers would be 3. The fixed factory overhead cost applied to products during 1999 would be

Explanation / Answer

1. Fixed overhead budget variance = Budgeted Fixed overheads - Actual Fixed Overheads

-1,300 = Budgeted Fixed Overheads - $38,900

Budgeted Fixed Overheads = $38,900 - 1,300 = $37,600

2. Standard direct labor hours allowed = Actual units produced x budgeted labor hours per unit

= 17,000 x 1.2 hours = 20,400 hours

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