2. (23 points) E The company uses direct labor-hours for fixed overhead allocati

Question

2. (23 points) E The company uses direct labor-hours for fixed overhead allocation and anticipates 240,000 hours during the year for 480,000 units. An equal number of units are budgcted for each moeth Quantity of driver per clock: . Overhead rate per driver: -Fixed cost per .(10 points) During June 2018, 43,000 clocks were produced and 563,000 were spent ob fxed overhead Compute the respective fixed manufacturing overbead variance(o) o Variance name: Show your work, neatly Circle: F Cirele: F UF . (12 points) Capture the respective variance(s) with journal entries and close to cost of goods sold.

Explanation / Answer

Quantity of driver per clock: 240000 direct labor hours/480000 clocks = 0.50 direct labor hours

Overhead rate per driver: Budgeted overheads/Direct labor hours = $720000/240000 hours = $3 per direct labor hour

Fixed cost per unit: 0.50 direct labor hour x $3 = $1.50

Fixed overhead budget variance = Budgeted overheads - Actual overheads = ($720000/12) - $63000 = $60000 - $63000 = $3000 U

Fixed overhead volume variance = Budgeted overheads - Applied overheads = $60000 - (43000 x $1.50) = $60000 - $64500 = $4500 F

Variance name: Fixed overhead budget variance Variance amount: $3000 U Variance name: Fixed overhead volume variance Variance amount: $12000 F

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