question archive Required information A manufacturer of industrial equipment has a standard costing system based on direct labour hours (DLHs) as the measure of activity
Required information A manufacturer of industrial equipment has a standard costing system based on direct labour hours (DLHs) as the measure of activity
Subject:AccountingPrice:4.89 Bought3
Required information
A manufacturer of industrial equipment has a standard costing system based on direct labour hours (DLHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:
Denominator Level of Activity8,000 DLHsOverhead Costs at the Denominator Activity Level: Variable Overhead Cost$56,400Fixed Overhead Cost$100,800
The following data pertain to operations for the most recent period:
Actual Hours7,800 DLHsStandard Hours Allowed for the Actual Output7,735 DLHsActual Total Variable Overhead Cost$54,210Actual Total Fixed Overhead Cost$100,200
How much overhead was applied to products during the period, rounded to the nearest dollar?
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Standard variable overhead rate (budgeted)= Flexible budget variable costs/ Denominator activity level
= $56400/ 8000 direct labor hours= $7.05 per direct labor hour
Standard fixed overhead rate= Flexible budget fixed costs/ Denominator activity level= $100800/ 8000= $12.6 per direct labor hour
Variable overhead applied= Standard rate* Standard Hours Allowed for the Actual Output= $7.05* 7735 hours= $54531.75
Fixed overhead applied= Standard rate* Standard Hours Allowed for the Actual Output= $12.6* 7735 hours= $97461
Total overhead applied to products during the period= Variable overhead applied+ Fixed overhead applied
= $54531.75+ $97461= $151992.75= $151993
