Sparrow Company produces one product, a putter called GO-Putter. It uses a standard cost system an determines that it should take one hour of direct labor to produce one GO-Putter. The normal production capacity for this putter is 120,000 units per year. The total budgeted overhead at normal capacity is 1,080,000 comprised of 360,000 of variable costs and 720,000 of fixed costs. The company applies overhead on the basis of direct labor hours. During the current year, it produced 76,600 putters, worked 98,400 direct labor hours, and incurred variable overhead costs of 143,395 and fixed overhead costs of 602,095. Required: 1.Predetermined Overhead Rate 2.Compute the applied overhead for the year. 3.Compute the total overhead variance.
Sparrow Company produces one product, a putter called GO-Putter. It uses a standard cost system an determines that it should take one hour of direct labor to produce one GO-Putter. The normal production capacity for this putter is 120,000 units per year. The total budgeted overhead at normal capacity is 1,080,000 comprised of 360,000 of variable costs and 720,000 of fixed costs. The company applies overhead on the basis of direct labor hours. During the current year, it produced 76,600 putters, worked 98,400 direct labor hours, and incurred variable overhead costs of 143,395 and fixed overhead costs of 602,095. Required: 1.Predetermined Overhead Rate 2.Compute the applied overhead for the year. 3.Compute the total overhead variance.
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter8: Standard Cost Accounting—materials, Labor, And Factory Overhead
Section: Chapter Questions
Problem 14P: Fargo Co. manufactures products in batches of 100 units per batch. The company uses a standard cost...
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