The following information was extracted from the accounting records of Noelle Co

ID: 2562413 • Letter: T

Question

The following information was extracted from the accounting records of Noelle Company for product Z:

STANDARD COST CARD

PER UNIT

Direct materials: 8 pounds × $1.20 per pound

Direct labor: 3 hours × $20 per hour

Factory overhead: ?

Budgeted overhead for the period is $360,000 of fixed costs and $2 per direct labor hour. Planned number of units to be produced is 10,000.

The following information is available regarding the company’s operations for the period:

Units produced 1,000

Direct labor 3,600 hours

Actual overhead incurred: $53,000

a) Noelle’s standard overhead rate is

b) Noelle’s amount of over/under applied overhead using standard costing would be

(a) Standard rate overhead rate is $14 per direct labor hour

Budgeted production = 10,000 units

Direct labor hours per unit = 3 hours

Total budgeted labor hours =30,000

Budgeted fixed overheads = $360,000

Budgeted fixed overheads per hour = $12

Budgeted variable oerheads per hour = $2

Standard rate overhead rate = $12 + $2 = $14 per direct labor hour

(b) Under applied overhead = $2,600

Actual direct labor hours 3,600

Overhead rate per hour $14

Overhead applied (3,600 x $14) $50,400

Actual overhead incurred $53,000

Under applied overhead = ($53,000 - $50,400) = $2,600

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