Byrd Company produces one product, a putter called GO-Putter. Byrd uses a standard cost system and determines that it should take one hour of direct labor to produce one GO-Putter. The normal production capacity for this putter is 145,000 units per year. The total budgeted overhead at normal capacity is $1,160,000 comprised of $435,000 of variable costs and $725,000 of fixed costs. Byrd applies overhead on the basis of direct labor hours. During the current year, Byrd produced 79,900 putters, worked 94,400 direct labor hours, and incurred variable overhead costs of $157,882 and fixed overhead costs of $539,908. a) Compute the predetermined variable overhead rate and the predetermined fixed overhead rate. b) Compute the applied overhead for Byrd for the year. c) Compute the total overhead variance.
Byrd Company produces one product, a putter called GO-Putter. Byrd uses a standard cost system and determines that it should take one hour of direct labor to produce one GO-Putter. The normal production capacity for this putter is 145,000 units per year. The total budgeted overhead at normal capacity is $1,160,000 comprised of $435,000 of variable costs and $725,000 of fixed costs. Byrd applies overhead on the basis of direct labor hours. During the current year, Byrd produced 79,900 putters, worked 94,400 direct labor hours, and incurred variable overhead costs of $157,882 and fixed overhead costs of $539,908. a) Compute the predetermined variable overhead rate and the predetermined fixed overhead rate. b) Compute the applied overhead for Byrd for the year. c) Compute the total overhead variance.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Byrd Company produces one product,
a putter called GO-Putter. Byrd uses a
standard cost system and determines
that it should take one hour of direct
labor to produce one GO-Putter. The
normal production capacity for this
putter is 145,000 units per year. The
total budgeted overhead at normal
capacity is $1,160,000 comprised of
$435,000 of variable costs and
$725,000 of fixed costs. Byrd applies
overhead on the basis of direct labor
hours.
During the current year, Byrd
produced 79,900 putters, worked
94,400 direct labor hours, and
incurred variable overhead costs of
$157,882 and fixed overhead costs of
$539,908.
Compute the predetermined
variable overhead rate and the
predetermined fixed overhead rate.
b) Compute the applied overhead for
Byrd for the year.
c) Compute the total overhead
variance.
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