Fulton Company incurred actual overhead costs of $160,000 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 $157,500, and budgeted direct-labour cost was $75,000. Actual direct-labour cost was $80,000 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 $160,000, while the budgeted overhead was $157,500. This means that there was an overhead variance of $2,500. Since the actual overhead costs were higher than the budgeted overhead, the variance is unfavorable and should be debited to Factory Department Overhead Control.

Fulton Company Incurred Actual Overhead Costs of $160,000 for the Year