Chapter 10, Problem 79C

1.

To determine

Compute the value of fixed overhead rate with the help of standard direct labor hours.

2.

To determine

Compute the value of fixed overhead spending variance and volume variance for the LR and AP. Explain the most likely cause of spending variance. Also, explain the reason for difference in the volume variances in the two plants.

3.

To determine

Explain the actions that should be taken to manage capacity costs.

4.

To determine

Compute the fixed overhead cost per subassembly for each plant. Identify whether the amount of both plants are differ. Also, identify whether the ABC concept helps in analyzing this issue.