on (in units
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Manuel Company predicts it will operate at 80% of its productive capacity. Its overhead allocation base is DLH and its
standard amount per allocation base is 0.5 DLH per unit. The company reports the following for this period.
Production (in units)
Overhead
Variable overhead
Fixed overhead
Total overhead
Flexible Budget at
80% Capacity
53,000
1. Standard overhead rate
2. Standard overhead applied
3. Overhead variance
$ 291,500
53,000
$ 344,500
Actual
Results
48,800
$344,600
1. Compute the standard overhead rate. Hint: Standard allocation base at 80% capacity is 26,500 DLH, computed as 53,000 units x
0.5 DLH per unit.
Compute the standard overhead applied.
3. Compute the total overhead variance. (Indicate the effect of the variance by selecting favorable, unfavorable, or no variance.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F88957f30-db5b-4568-af5b-481f5c2f675d%2F8a3aaef7-0b6d-4c13-9611-1732c5106c21%2Fxtqqz5o_processed.png&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
Manuel Company predicts it will operate at 80% of its productive capacity. Its overhead allocation base is DLH and its
standard amount per allocation base is 0.5 DLH per unit. The company reports the following for this period.
Production (in units)
Overhead
Variable overhead
Fixed overhead
Total overhead
Flexible Budget at
80% Capacity
53,000
1. Standard overhead rate
2. Standard overhead applied
3. Overhead variance
$ 291,500
53,000
$ 344,500
Actual
Results
48,800
$344,600
1. Compute the standard overhead rate. Hint: Standard allocation base at 80% capacity is 26,500 DLH, computed as 53,000 units x
0.5 DLH per unit.
Compute the standard overhead applied.
3. Compute the total overhead variance. (Indicate the effect of the variance by selecting favorable, unfavorable, or no variance.)
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