Glassco Company is planning to produce 4,500,000 speakers for the coming 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 coming year is $720,000.The actual variable overhead incurred was $714,000.What was the applied variable overhead for the year?

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Quizplus · Accepted Answer

The applied variable overhead is calculated using the predetermined overhead rate based on expected production. Expected production is 4,500,000 speakers, each requiring 0.80 direct labor hours, totaling 3,600,000 direct labor hours. The budgeted variable overhead is $720,000, so the predetermined overhead rate is $720,000 / 3,600,000 hours = $0.20 per hour. The actual production was 4,000,000 speakers, requiring 3,200,000 direct labor hours. Therefore, the applied variable overhead is 3,200,000 hours * $0.20 = $640,000.

Glassco Company Is Planning to Produce 4,500,000 Speakers for the Coming