Primary Corporation has a Standard cost system in which it applies overhead to p

Question

Primary 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 $487.500 Actual fixed overhead cost for the year $480.000 Budgeted standard direct labor-hours (denominator level of activity) 65.000 Actual direct labor-hours 66.000 Standard direct labor-hours allowed for the actual output 63.000 Required: Compute the fixed portion of the predetermined overhead rate for the year. (Round Fixed portion of the predetermined overhead rate to 2 decimal places.) Compute the fixed overhead budget variance and volume variance. (Round Fixed portion of the predetermined overhead rate to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.))

Explanation / Answer

  

(1) Fixed portion of the of the predetrmine overhead rate : Fixed Overhead $   487,500.00 Denominator Level of activity 65,000 Fixed portion of predermine overhead rate $ 7.50

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