Question

The predetermined overhead rate for concord corporation 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 $8288 variable and $5040 fixed, and 1400 units were produced. the direct labor standard is 2 hours per unit produced. the total overhead variance is

Answer 1

Actual overhead=8,288+5,040=13,328

Estimated overhead
5×(2×1,400)
5×2800 direct labor hours
=14,000

The total overhead variance
14,000−13,328
=672 over applied

Answer 2

672 (Favorable)

Step-by-step explanation:

1. Actual Overheads incurred:

Actual Overheads = Variable Overhead + Fixed Overhead = $8288 +$5040 = $13,328

2. Budgeted / Estimated Overheads:

Estimated Overheads = Predetermined Overhead Rate x Total Hours

Estimated Overheads = $5 x (2 x 1,400) hours = 5 x 2,800 = $14,000

3. Total overhead variance:

Total Overhead Variance = Budgeted Overheads - Actual Overheads

Total Overhead Variance = $14,000 - $13,328 = 672 (Favorable)