Reed Company incurred actual overhead costs of $640,000 for the year. A budgeted factory-overhead rate of 210 percent of direct-labour cost was determined at the beginning of the year. Budgeted factory overhead was $630,000, and budgeted direct-labour cost was $300,000. Actual direct-labour cost was $320,000 for the year. The disposition of the variance, assuming a material amount, would include a

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The actual overhead costs incurred were $640,000, while the budgeted overhead was $630,000. The difference of $10,000 is an unfavorable overhead variance. This variance is debited to Factory Department Overhead Control to increase the balance of the account and reflect the actual overhead costs incurred.

Reed Company Incurred Actual Overhead Costs of $640,000 for the Year