Lusive Corporation has a standard cost system in which it applies overhead to pr

Question

Lusive 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:

Compute the fixed portion of the predetermined overhead rate for the year. (Omit the "$" sign in your response.)

Compute the fixed overhead budget and volume variances. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.). Omit the "$" sign in your response.)

Lusive 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:

Explanation / Answer

1. Fixed portion of the predetermined overhead rate for the year = Total Budgeted Fixed OH for the year/Budgeted Standard Labour hrs = $452700/50,300 = $9per Standard Labour Hour

2. Fixed-overhead budget variance (FOH_BV) = actual fixed OH - budgeted fixed OH
i.e., FOH_BV = 394,000 - 452,700 = - 58700 = 58700 F

Fixed-overhead volume variance (FOH_VV) = budgeted fixed OH - applied fixed OH
Applied Fixed OH = Pre Determined OH rate*Standard Hours
i.e. Applied Fixed OH= (Budgeted Fixed OH/Actual Hrs)*Standard Hrs
i.e. Applied Fixed OH= ($394000/51300)*47300 = $363278.75 = $363279
i.e. FOH_VV = $452700 - $363279 = $ 89421F

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