Drink Well, Inc., manufactures custom-ordered commemorative beer steins. Its sta

Question

Drink Well, Inc., manufactures custom-ordered commemorative beer steins. Its standard cost information follows:

Calculate the total over- or underapplied fixed manufacturing overhead for Drink Well. (Do not round your intermediate calculations. Input the amount as positive value. Omit the "$" sign in your response.)

Standard
Quantity Standard Price
(Rate) Standard Unit
Cost Direct costs Clay 1.5 lbs. $ 1.60 per lb. $ 2.40 Direct labor 1.5 hrs. 12.00 per hr. 18.00 Variable MOH 1.20 per direct labor hour 1.80 Fixed MOH ($250,000/100,000 units) 2.50

Explanation / Answer

Budgeted FOH = $250,000 for 100,000 units Actual prod is 110000 units = (110,000-100000)/100000 = 10% more So FOH applied = 1.10*$250,000 = $275,000 Avtual FOH = $295,000 So FOH Overapplied by 295000-275000 = 20,000

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