E 8-16 Determining Budgeted Overhead The overhead application rate for a company is $10 per unit, made up of $6 per unit of fixed overhead and $4 per unit of variable over- head. Normal capacity is 10,000 units. In one month there was a favorable flexible budget variance of $2,500. Actual overhead for the month was $110,000 and actual units produced were 13,125. Based on this information, determine the amount of the budgeted overhead for the actual level of production.Use this format: VanDerbeck, Chapter 08 297E8-16a. and b.Actual factory overheadBudget based on standard hoursStandard hours x stancdard rate9,000 units × 2 hr × $4/unit =Fixed costs ….... $52,000Fixed cost:10,000 x $5.00Variable cost:9,000 x $3.00 =$50,000Variable costs ....28,50O$ 80,50027.000$77,0 00$72,00oFlexible-Budget Variance| (a) $3,500 (U)Production-Volume Variance(b) $5,0 00 (U)Net Factory Overhead Variance$8,500 (U)Actual factory overhead (total).............Applied factory overhead (18,0o 0 hours x $4)Underapplied factory overhead .Net variance:Flexible-budget variance (U)Production-volume variance (U)$80,50O8,500Net variance (U)....$48,500E8-17a. and b.Standard hours × standard rateActual factory overheadBudget based on standard hoursFixed c ost:10,000 x $10.00Variable cost:11,000 x $5.00 =Fixed costs ...... $10o3,00011,000 units x $15 /unit =$100,0 00Variable costs ....48,000O55,000$155,0 00$151,000$165,000Flexible-Budget Varianoce(a)$4,0 00(F)Production-Volume Variance(b) $10 .000 (F>Net Factory Overhead Variance$14,00O (F)Actual factory overhead (total)Applied factory overheadOverrapplied factory overhead.c.$151,000$14,00002013 Cengage Learning. All Rights Reserved. May not be seanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

The question is based on the concept of Cost Accounting.

The overhead application rate for a company is $10 per unit, made up of $6 per unit of fixed overhead and $4 per unit of variable over- head. Normal capacity is 10,000 units. In one month there was a favorable flexible budget variance of $2,500. Actual overhead for the month was $110,000 and actual units produced were 13,125. Based on this information, determine the amount of the budgeted overhead for the actual level of production.

The overhead application rate for a company is $10 per unit, made up of $6 per unit of fixed overhead and $4 per unit of variable over- head. Normal capacity is 10,000 units. In one month there was a favorable flexible budget variance of $2,500. Actual overhead for the month was $110,000 and actual units produced were 13,125. Based on this information, determine the amount of the budgeted overhead for the actual level of production.

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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