OVERHEAD APPLICATION, FIXED AND VARIABLE OVERHEAD VARIANCES Tules Company is planning to produce 2,400,000 power drills for the...

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Accounting

OVERHEAD APPLICATION, FIXED AND VARIABLE OVERHEADVARIANCES
Tules Company is planning to produce 2,400,000 power drills forthe coming year. The company uses direct labour hours to assignoverhead to products. Each drill requires 0.5 standard hour oflabour for completion. The total budgeted overhead was $2,700,000.The total fixed overhead budgeted for the coming year is$1,320,000. Predetermined overhead rates are calculated usingexpected production, measured in direct labour hours. Actualresults for the year are:
Actual production(units)      2,360,000
Actual direct labour hours    1,190,000
Actual variable overhead   $1,410,000
Actual fixedoverhead         $1,260,000
Required:
Compute the applied fixed overhead.
Compute the fixed overhead spending and efficiencyvariances.
Compute the applied variable overhead.
Compute the variable overhead spending and volumevariances.

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SOLUTION Total direct labor hours Budgeted production Direct labor hours per unit 2400000 050 1200000 Budgeted variable overheads Total budgeted overhead Budgeted fixed overheads 2700000 See Answer

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