Washington, Inc. has budgeted fixed factory overhead costs at $150,000 per month and variable factory overhead at a rate of $6 per direct-labour hour. The standard direct-labour hours allowed for January production were 18,000. An analysis of the factory overhead indicates that during January there was an unfavourable flexible budget variance of $5,000 and a favourable production volume variance of $3,000.
Required:
a. Compute the actual factory overhead cost for January.
b. Calculate the applied overhead cost for January.

Question

Quizplus · Accepted Answer

The Answer of Washington, Inc. has budgeted fixed factory overhead costs at $150,000 per month and variable factory overhead at a rate of $6 per direct-labour hour. The standard direct-labour hours allowed for January production were 18,000. An analysis of the factory overhead indicates that during January there was an unfavourable flexible budget variance of $5,000 and a favourable production volume variance of $3,000.
Required:
a. Compute the actual factory overhead cost for January.
b. Calculate the applied overhead cost for January.