The predetermined overhead rate for Weed-B-Gone is $10, comprised of a variable

Question

The predetermined overhead rate for Weed-B-Gone is $10, comprised of a variable overhead rate of $6 and a fixed rate of $4. The amount of budgeted overhead costs at normal capacity of $300,000 was divided by normal capacity of 30,000 direct labor hours, to arrive at the predetermined overhead rate of $10. Actual overhead for June was $19,000 variable and $12,100 fixed, and standard hours allowed for the product produced in June was 3,000 hours. The total overhead variance is Question 3 options: $1,100 unfavorable $1,100 favorable $6,100 unfavorable $6,100 favorable

Explanation / Answer

The predetermined overhead rate for Weed-B-Gone is $10, comprised of a variable overhead rate of $6 and a fixed rate of $4. The amount of budgeted overhead costs at normal capacity of $300,000 was divided by normal capacity of 30,000 direct labor hours, to arrive at the predetermined overhead rate of $10. Actual overhead for June was $19,000 variable and $12,100 fixed, and standard hours allowed for the product produced in June was 3,000 hours. The total overhead variance is Question 3 options:

$1,100 unfavorable-correct
$1,100 favorable
$6,100 unfavorable
$6,100 favorable

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