PLEASE ANSWER AND PROVIDE SOLUTION 98. Peters Company uses a flexible budget system and prepared the following informationfor the year:Percent of capacityDirect labor hours80%90%Variable factory overheadFixed factory overheadTotal factory overheadrate per DLH24,000P48,000P108,00027,000P54,000P108.000P7.00P6.50Peters operated at 80% of capacity during the year but applied factory overhead based onthe 90% capacity level. Assuming that actual factory overhead was equal to the budgetedamount 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)

Overhead amount of cost is the cost which is incurred by the company in order to make the product…

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

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Question

PLEASE ANSWER AND PROVIDE SOLUTION

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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