**Advent Corporation Production Analysis**Advent Corporation has initiated the production of automated garbage bins. The company employs a standard cost system, estimating that each garbage bin requires two hours of direct labor to produce.**Production Capacity and Budgeting:**- The normal production capacity for the bins is 62,500 units annually.- The total budgeted overhead at this normal capacity is $450,000, which consists of: - $200,000 in variable costs - $250,000 in fixed costsAdvent Corporation calculates overhead based on direct labor hours.**Current Year Production Details:**- Number of bins produced: 95,000- Direct labor hours worked: 99,000- Incurred variable overhead costs: $265,000- Incurred fixed overhead costs: $326,200**Required Calculations:**a. Compute the predetermined variable overhead rate and the predetermined fixed overhead rate.b. Compute the applied overhead for Advent for the year.c. Compute the total overhead variance. The analysis involves determining the efficiency and cost-effectiveness of Advent Corporation’s production processes over the year.

Solution:- a)Calculation of the predetermined variable overhead rate and the predetermined fixed…

Advent Corporation started to produce automated garbage bins. The company uses a standard cost system and determines that it should take two hours of direct labour to produce one garbage bin. The normal production capacity for the company's bins is 62,500 units per year. The total budgeted overhead at normal capacity is $450,000 comprised of $200,000 of variable costs and $250,000 of fixed costs. Advent Corporation applies overhead on the basis of direct labour hours. During the current year, Advent Corporation produced 95,000 bins, worked 99,000 direct labour hours, and incurred variable overhead costs of $265,000 and fixed overhead costs of $326,200. Required: a. Compute the predetermined variable overhead rate and the predetermined fixed overhead rate. b. Compute the applied overhead for Advent for the year. c. Compute the total overhead variance.

Advent Corporation started to produce automated garbage bins. The company uses a standard cost system and determines that it should take two hours of direct labour to produce one garbage bin. The normal production capacity for the company's bins is 62,500 units per year. The total budgeted overhead at normal capacity is $450,000 comprised of $200,000 of variable costs and $250,000 of fixed costs. Advent Corporation applies overhead on the basis of direct labour hours. During the current year, Advent Corporation produced 95,000 bins, worked 99,000 direct labour hours, and incurred variable overhead costs of $265,000 and fixed overhead costs of $326,200. Required: a. Compute the predetermined variable overhead rate and the predetermined fixed overhead rate. b. Compute the applied overhead for Advent for the year. c. Compute the total overhead variance.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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