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

Privack 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:


Budgeted variable overhead cost per direct labor-hour	$	3.50
Total budgeted fixed overhead cost per year	$	622,499
Budgeted direct labor-hours (denominator level of activity)		59,286
Actual direct labor-hours		86,000
Standard direct labor-hours allowed for the actual output		80,000

Required:

1. Compute the predetermined overhead rate for the year. Be sure to include the total budgeted fixed overhead and the total budgeted variable overhead in the numerator of your rate. (Round your answer to the nearest whole dollar amount.)

2. Compute the amount of overhead that would be applied to the output of the period.

Solutions

Expert Solution


	Predetermined Overhead rate = Total overhead / Denominator level of activity


	Total budgeted fixed overhead cost per year	622,499
	Budgeted variable overhead cost	207,501	(59286*3.5)

	Total Overhead	830,000

	Denominator level of activity	59,286

1)	Predetermined overhead	14.00


2)	amount of overhead that would be applied to the output of the period	1,120,000	(80000*14)
	(Standard direct labor-hours allowed for the actual output * predetermined OH rate)

ekkarill92 answered 1 year ago

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