Abba Company produces sails for boats. The Houston plant uses a standard costing

Question

Abba Company produces sails for boats. The Houston plant uses a standard costing system with the following standards and actuals.

Direct labor is the basis for applying variable and fixed overhead.

What is the dollar amount for Variable Overhead Applied?

Standards     Direct Labor         Standard Rate $ 13         Standard Usage 0.72 hours     Variable Overhead         Standard Rate $ 8 December Data     Budgeted Production for December 20,983     Budgeted Fixed Overhead for December $ 33,334     Number of Sails Produced 115,094     Direct Labor         Actual Usage 24,370 hours     Actual Variable Overhead Costs $ 500,380     Actual Fixed Overhead Costs $ 154,720

Explanation / Answer

Answer:

Variable Overhead Applied = Actual Direct Labor Hours * Standard Rate per Hour
Variable Overhead Applied = 24,370 * $13
Variable Overhead Applied = $316,810

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