Asked by
Jasmine Stevenson
on Nov 13, 2024
Verified
The predetermined overhead rate for Zane Company is $5 comprised of a variable overhead rate of $3 and a fixed rate of $2. The amount of budgeted overhead costs at normal capacity of $150000 was divided by normal capacity of 30000 direct labor hours to arrive at the predetermined overhead rate of $5. Actual overhead for June was $8900 variable and $5400 fixed and 1500 units were produced. The direct labor standard is 2 hours per unit produced. The total overhead variance is
A) $1800 F.
B) $700 F.
C) $700 U.
D) $1800 U.
Predetermined Overhead Rate
A rate calculated before a period begins, used to apply manufacturing overhead costs to products based on a specified activity base.
Variable Overhead
Costs that fluctuate with the level of production or service delivery, such as utilities or raw materials.
Total Overhead Variance
The difference between the actual overhead incurred and the standard overhead allocated for the actual production achieved.
- Acquire knowledge on the theories of diverse variances pertinent to overhead, labor, and material costs.
- Assess the complete overhead variance, along with the labor rate and quantity variances, and the material price and quantity variances.
- Pinpoint the elements that impact the computation and setting of the predetermined overhead rate.
Verified Answer
BG
Learning Objectives
- Acquire knowledge on the theories of diverse variances pertinent to overhead, labor, and material costs.
- Assess the complete overhead variance, along with the labor rate and quantity variances, and the material price and quantity variances.
- Pinpoint the elements that impact the computation and setting of the predetermined overhead rate.