The loan department of Calgary Bank uses standard costs to determine the overhead cost of processing loan applications. During the current month, a fire occurred, and the accounting records for the department were mostly destroyed. The following data were salvaged from the ashes.Standard variable overhead rate per hour $9 Standard hours per application 3 Standard hours allowed 4,980 Standard fixed overhead rate per hour $7 Actual fixed overhead cost $35,630 Variable overhead budget based on standard hours allowed $18,300 Fixed overhead budget $35,630 Overhead controllable variance $1,000 U(a)Determine the following.(1) Total actual overhead cost $ (2) Actual variable overhead cost $ (3) Variable overhead costs applied $ (4) Fixed overhead costs applied $ (5) Overhead volume variance $ (b)Determine how many loans were processed.

Total overhead cost = Standard fixed overhead + Standard variable overhead + overhead…

Answered: The loan department of Calgary Bank…

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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The loan department of Calgary Bank uses standard costs to determine the overhead cost of processing loan applications. During the current month, a fire occurred, and the accounting records for the department were mostly destroyed. The following data were salvaged from the ashes.

Standard variable overhead rate per hour	$9
Standard hours per application	3
Standard hours allowed	4,980
Standard fixed overhead rate per hour	$7
Actual fixed overhead cost	$35,630
Variable overhead budget based on standard hours allowed	$18,300
Fixed overhead budget	$35,630
Overhead controllable variance	$1,000	U

(a)

Determine the following.

(1)	Total actual overhead cost	$
(2)	Actual variable overhead cost	$
(3)	Variable overhead costs applied	$
(4)	Fixed overhead costs applied	$
(5)	Overhead volume variance	$

(b)

Determine how many loans were processed.

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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