If theoretical capacity is 12000 direct labour hours And average practical capacity is 80% = 9600...

If theoretical capacity is 12000 direct labour hours

And average practical capacity is 80% = 9600 direct labour hours.

And budgeted labour hours = 9490

Actual direct labour hours used = 9974

Predetermined overhead rate $113.74679

Budgeted overhead cost is $1079457

Variable $192957

Fixed $886500

Actual over head cost is $1092650

Variable $193150

Fixed $899500

What’s the highlights of idle capcity costs ?

Thank you

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Expert Solution

Budgeted labour hours	9490
Budgeted overhead cost:
Variable	192957
Fixed	886500
Total budgeted overhead		1079457

Actual labour hours	9974
Actual overhead cost
Variable	193150
Fixed	899500
Total actual overhead		1092650

Highlight of idle capacity with respect to budgeted cost:

Theoretical capacity	12000
Budgeted capacity	9490
Idle capacity (12000 - 9490)	2510

Budgeted overhead cost:
Variable	192957
Fixed	886500
Total budgeted overhead		1079457

Budgeted overhead cost for idle capacity
Variable (192957 X 2510/9490)	51034.992
Fixed	0
Total budgeted overhead		51034.99

Highlight of idle capacity with respect to actual cost:

Actual labour hours	9974
Actual overhead cost
Variable	193150
Fixed	899500
Total actual overhead		1092650

Theoretical capacity	12000
Actual direct labour hours	9974
Idle capacity (12000 - 9490)	2026

Actual labour hours	9974
Actual overhead cost
Variable	193150
Fixed	899500
Total actual overhead		1092650

Actual overhead cost for idle capacity
Variable (193150X 2026/9974)	39234.199
Fixed	0
Total budgeted overhead		39234.2

ekkarill92 answered 11 months ago

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