Primara Corporation has a standard cost system in which it applies overhead to p

Question

Primara Corporation has a standard cost system in which it applies overhead to products based on the standard direct labor-hours allowed for the actual output of the period. Data concerning the most recent year appear below: Total budgeted fixed overhead cost for the year Actual fixed overhead cost for the year Budgeted standard direct labor-hours (denominator level of activity) Actual direct labor-hours Standard direct labor-hours allowed for the actual output $459,900 $453,000 63,000 64,000 61,000 Required 1. Compute the fixed portion of the predetermined overhead rate for the year. (Round Fixed portion of the predetermined overhead rate to 2 decimal places.) Fixed overhead Denominator level of activity Fixed portion of the predetermined overhead rate

Explanation / Answer

1) Compute fixed overhead rate ;

Fixed overhead = 459900

Denominator level of activity = 63000

Fixed portion of the predetermine overhead rate = 7.30 per DLH

2)

Budget variance Actual fixed overhead cost for the year 453000 Budgeted fixed overhead cost 459900 Budget variance 6900 F Volume variance Fixed protion of the predetermine overhead rate 7.3 Denominator hours 63000 Standard hours allowed 61000 Volume variance 14600 F

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