Jim\'s Landscaping is the business of maintaining and improving yards in surroun

Question

Jim's Landscaping is the business of maintaining and improving yards in surrounding areas. The company bases its overhead cost budgets on the following data
Variable overhead costs:
Supplies $4 per yard
Machine maintenance $2 per yard
Chemicals $6 per yard

Fixed overhead costs:
Salaries and wages $2300 per month
Machine maintenance $800 per month
Utilities $400 per month
Rent $1100 per month

In June, the following actual costs were incurred for 83 yards:
Supplies $320
Machine maintenance $180
Chemicals $500
Salaries and wages $2500
Depreciation $800
Utilities $450
Rent $1100


This is what I started with:
Variable overhead costs:
Supplies $4 per yard
Machine maintenance $2 per yard
Chemicals $6 per yard

Total variable cost $12

Fixed overhead cost
Salalries and wages $2,300 per month
Depreciation $ 800 per month
Utilities $ 400 per month
Rent $1,100 per month

Total Overhead cost $4,600

Explanation / Answer

Variable cost per unit 12 Fixed overhead cost Salaries and wages 2300 Machine maintenance 800 Utilities 400 Rent 1100 Total 4600 So overhead applied Variable = 83*12 996 Fixed 4600 Total overhead applied 5596 Actual cost incurred Supplies 320 Machine maintenance 180 Chemicals 500 Salaries and wages 2500 Depreciation 800 Utilities 450 Rent 1100 Actual cost incurred 5850 So Overhead underapplied = Overhead applied - Overhead incurred =5596-5850 -254

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