Question

zepol company is planning to produce 600,000 power drills for the coming year. the company uses direct labor hours to assign overhead to products. each drill requires 0.75 standard hours of labor for completion. the total budgeted overhead was $1,777,500. the total fixed overhead budgeted for the coming year is $832,500. predetermined overhead rates are calculated using expected production, measured in direct labor hours. actual results for the year are: line item description numerical data actual production (units) 594,000 actual direct labor hours (ah) 446,000 actual variable overhead $928,000 actual fixed overhead $835,600 required: 1. compute the applied fixed overhead.

Answer 1

To compute the applied fixed overhead, we need to use the predetermined overhead rate and the actual direct labor hours.

Given:

Total fixed overhead budgeted for the year: $832,500

Actual direct labor hours: 446,000

To calculate the predetermined overhead rate, we divide the total fixed overhead by the expected production measured in direct labor hours:

Predetermined Overhead Rate = Total Fixed Overhead / Expected Production in Direct Labor Hours

Expected Production = 600,000 power drills

Direct labor hours per drill = 0.75 hours

Expected Production in Direct Labor Hours = Expected Production x Direct Labor Hours per Drill

Calculating the expected production in direct labor hours:

Expected Production in Direct Labor Hours = 600,000 x 0.75

Calculating the predetermined overhead rate:

Predetermined Overhead Rate = $832,500 / (600,000 x 0.75)

Now that we have the predetermined overhead rate, we can compute the applied fixed overhead:

Applied Fixed Overhead = Actual Direct Labor Hours x Predetermined Overhead Rate

Calculating the applied fixed overhead:

Applied Fixed Overhead = 446,000 x (Predetermined Overhead Rate)

Therefore, to compute the applied fixed overhead, you need to use the predetermined overhead rate and the actual direct labor hours. Unfortunately, the value of the predetermined overhead rate is missing in the information provided. Please provide the predetermined overhead rate, and I will assist you in calculating the applied fixed overhead.