Jay Levitt Company produces one product, a putter called GO-Putter. Levitt uses

Question

Jay Levitt Company produces one product, a putter called GO-Putter. Levitt 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 100,000 units per year. The total budgeted overhead at normal capacity is $800,000 comprised of $200,000 of variable costs and $600,000 of fixed costs. Levitt applies overhead on the basis of direct labor hours.
During the current year, Levitt produced 90,000 putters, worked 94,000 direct labor hours, and incurred variable overhead costs of $186,000 and fixed overhead costs of $600,000.




Compute the predetermined variable overhead rate and the predetermined fixed overhead rate.
Predetermined variable overhead rate $
Predetermined fixed overhead rate $







Compute the applied overhead for Levitt for the year.
$






Compute the total overhead variance.
$ FavorableUnfavorable






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Explanation / Answer

Standard Actual Rating Production 100000 90000 Overheads: Variable 200000 186000 Fixed 600000 600000 Direct Labor Hours 100000 94000 Predetermined Variable overhead Rate = 200000 /100000 = 186000 / 94000 = 2 = 1.98 Favorable Predetemined Fixed Overhead Rate = 600000 / 100000 = 600000 / 94000 = 6 = 6.38 Unfavorable Total overhead rate = 800000 / 100000 = 786000 / 94000 = 8 = 8.36 Unfavorable Standard Actual Rating Production 100000 90000 Overheads: Variable 200000 186000 Fixed 600000 600000 Direct Labor Hours 100000 94000 Predetermined Variable overhead Rate = 200000 /100000 = 186000 / 94000 = 2 = 1.98 Favorable Predetemined Fixed Overhead Rate = 600000 / 100000 = 600000 / 94000 = 6 = 6.38 Unfavorable Total overhead rate = 800000 / 100000 = 786000 / 94000 = 8 = 8.36 Unfavorable
Thank you....    Standard Actual Rating Production 100000 90000 Overheads: Variable 200000 186000 Fixed 600000 600000 Direct Labor Hours 100000 94000 Predetermined Variable overhead Rate = 200000 /100000 = 186000 / 94000 = 2 = 1.98 Favorable Predetemined Fixed Overhead Rate = 600000 / 100000 = 600000 / 94000 = 6 = 6.38 Unfavorable Total overhead rate = 800000 / 100000 = 786000 / 94000 = 8 = 8.36 Unfavorable

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