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Peters operated at 80% of capacity during the year but applied factory overhead based on the 90% capacity level. Assuming that actual factory overhead was equal to the budgeted amount for the attained capacity, what is the amount of overhead variance for the year?

Peters operated at 80% of capacity during the year but applied factory overhead based on the 90% capacity level. Assuming that actual factory overhead was equal to the budgeted amount for the attained capacity, what is the amount of overhead variance for the year?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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98. Peters Company uses a flexible budget system and prepared the following information for the year: Percent of capacity Direct labor hours 80% 90% Variable factory overhead Fixed factory overhead Total factory overhead rate per DLH 24,000 P48,000 P108,000 27,000 P54,000 P108.000 P7.00 P6.50 Peters operated at 80% of capacity during the year but applied factory overhead based on the 90% capacity level. Assuming that actual factory overhead was equal to the budgeted amount for the attained capacity, what is the amount of overhead variance for the year? a. P6,000 overabsorbed. b. P6,000 underabsorbed. C. P12,000 overabsorbed. d. P12,000 underabsorbed. (aicpа)
Transcribed Image Text:98. Peters Company uses a flexible budget system and prepared the following information for the year: Percent of capacity Direct labor hours 80% 90% Variable factory overhead Fixed factory overhead Total factory overhead rate per DLH 24,000 P48,000 P108,000 27,000 P54,000 P108.000 P7.00 P6.50 Peters operated at 80% of capacity during the year but applied factory overhead based on the 90% capacity level. Assuming that actual factory overhead was equal to the budgeted amount for the attained capacity, what is the amount of overhead variance for the year? a. P6,000 overabsorbed. b. P6,000 underabsorbed. C. P12,000 overabsorbed. d. P12,000 underabsorbed. (aicpа)
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