Chapter 8, Problem 20E

Calculating amount of factory overhead applied to work in process

The overhead application rate for a company is $2.50 per unit, made up of $1.00 for fixed overhead and $1.50 for variable overhead. Normal capacity is 10,000 units. In one month, there was an unfavorable flexible budget variance of $200. Actual overhead for the month was $27,000. What was the amount of the budgeted overhead for the actual level of production?