Question:
Calculating factory overhead
The normal capacity of a factory is 8,000 units per month. Cost and production data follow:
|
Standard application rate for fixed overhead
|
$0.50 per unit
|
|
Standard application rate for variable overhead
|
$1.50 per unit
|
|
Production-Month 1
|
7,200 units
|
|
Production-Month 2
|
8,400 units
|
|
Actual factory overhead-Month 1
|
$14,700
|
|
Actual factory overhead-Month 2
|
$17,400
|
Calculate the amount of factory overhead allowed for the actual volume of production each month and the variance between budgeted and actual overhead for each month.