Answered: Budgeted variable overhead cost per…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Concept explainers

Question

Applying Overhead in a Standard Costing System

Privack Corporation has a standard cost system in which it applies overhead to products base the standard direct labor-hours allowed for the actual output of the period. Data concerning most recent year appear below:

Required:

1. Compute the predetermined overhead rate for the year. Be sure to include the total budget fixed overhead and the total budgeted variable overhead in the numerator of your rate.

2. Compute the amount of overhead that would be applied to the output of the period.

Budgeted variable overhead cost per direct labor-hour
Total budgeted fixed overhead cost per year...
Budgeted direct labor-hours (denominator level of activity)
Actual direct labor-hours.
Standard direct labor-hours aliowed for the actual output.
$2
.......
$250,000
....
39,000
38.000

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 4 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions