Question - Happy Valley Pet Products uses a standard costing system that applies overhead to products based on standard direct labour-hours allowed for actual output of the period. During the recent year, the following data were collected:
Total budgeted fixed overhead cost for the year - $69,460
Actual fixed overhead cost for the year - $66,860
Budgeted standard direct labour-hours - 15,100
Actual direct labour-hours - 16,300
Standard direct labour-hours allowed for the actual output - 13,600
Required:
1. Compute the fixed portion of the predetermined overhead rate for the year.
2. Compute the fixed overhead budget and volume variances.