Glassco Company was planning to produce 4,500,000 speakers for the current year. Actual production was 4,000,000 speakers. Each speaker requires 0.80 direct labour hours per unit. Predetermined overhead rates are calculated using expected production, measured in direct labour hours. The budgeted variable overhead for the current year was $720,000. The actual variable overhead incurred was $714,000. What was the applied variable overhead for the year?

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The applied variable overhead is calculated using the predetermined overhead rate based on expected production. Expected production was 4,500,000 speakers, each requiring 0.80 hours, totaling 3,600,000 direct labor hours. The budgeted variable overhead was $720,000, so the predetermined rate is $720,000 / 3,600,000 hours = $0.20 per hour. For actual production of 4,000,000 speakers, the applied overhead is 4,000,000 x 0.80 x $0.20 = $640,000.

Glassco Company Was Planning to Produce 4,500,000 Speakers for the Current