Primara Corporation has a standard cost system in which it applies overhead to products based on...

Primara Corporation has a standard cost system in which it applies overhead to products based on the standard direct labor-hours allowed for the actual output of the period. Data concerning the most recent year appear below: Total budgeted fixed overhead cost for the year $ 420,000 Actual fixed overhead cost for the year $ 415,000 Budgeted direct labor-hours (denominator level of activity) 60,000 Actual direct labor-hours 61,000 Standard direct labor-hours allowed for the actual output 58,000 Required: 1. Compute the fixed portion of the predetermined overhead rate for the year. (Round Fixed portion of the predetermined overhead rate to 2 decimal places.) 2. Compute the fixed overhead budget variance and volume variance. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.). Input all amounts as positive values.)

Expert Solution



	Budgeted FOH Cost	4,20,000
	Actual FOH Cost	4,15,000

	Budgeted DLH	60,000
	Actual DLH	61,000
	Standard DLH	58,000


1	Predetermined OH Rate:
	Budgeted FOH Cost	4,20,000
	Budgeted DLH	60,000

	Predetermined OH Rate	7.00


2	Fixed OH Budget Variance:
	Actual Fixed OH	4,15,000
	Budgeted Fixed OH	4,20,000

	Favourable Budget Variance	5,000


	Fixed OH Volume Variance:
	Standard Fixed OH	4,06,000	(58000*7)
	Budgeted Fixed OH	4,20,000

	Unfavourable Volume Variance	14,000

ekkarill92 answered 2 years ago

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