Problem - Huron Company produces a commercial cleaning compound known as Zoom. The direct labour standards for one unit of Zoom follow:
|
|
Standard Quantity or Hours
|
Standard Price or Rate
|
Standard Cost
|
|
Direct materials
|
4.30 kilograms
|
$1.90 per kilogram
|
$8.17
|
|
Direct labour
|
0.38 hours
|
$8.00 per hour
|
3.04
|
|
Variable overhead
|
0.38 hours
|
$1.30 per hour
|
0.49
|
The budgeted fixed overhead cost is $15,208 per month. The denominator activity level of the allocation base is 874 direct labour-hours.
During the most recent month, the following activity was recorded:
a.9,400 kilograms of material were purchased at a cost of $2.22 per kilogram.
b. All of the material purchased was used to produce 2,300 units of Zoom.
c. A total of 820 hours of direct labour time was recorded at a total labour cost of 9,266.
d. The variable overhead cost was $1 ,640, and the fixed overhead cost was $17,366.
Required -
Compute the fixed overhead budget and the volume variances for the month.
Compute the underapplied or overapplied overhead for the month.