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

Question

Privack 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:

Budgeted variable overhead cost per direct labor-hour $ 4.50

Total budgeted fixed overhead cost per year $ 563,213

Budgeted direct labor-hours (denominator level of activity) 59,286

Actual direct labor-hours 83,000 Standard direct labor-hours allowed for the actual output 81,000

Required: 1. Compute the predetermined overhead rate for the year. Be sure to include the total budgeted fixed overhead and the total budgeted variable overhead in the numerator of your rate. (Round your answer to the nearest whole dollar amount.) 2. Compute the amount of overhead that would be applied to the output of the period. (Round your intermediate calculations and final answer to the nearest whole dollar amount.)

Explanation / Answer

1. Compute the predetermined overhead rate for the year

Predetermine overhead rate = (563213/59286)+4.50 = 14 per labour hour

2) Applied overhead = 81000*14 = 1134000

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