Question - Jay Levitt Company produces one product, a putter called GO-Putter. Levitt uses a standard cost system and determines that it should take one hour of direct labor to produce one GO-Putter. The normal production capacity for this putter is 106,300 units per year. The total budgeted overhead at normal capacity is $804,900 comprised of $201,225 of variable costs and $603,675 of fixed costs. Levitt applies overhead on the basis of direct labor hours.
During the current year, Levitt produced 92,910 putters, worked 94,560 direct labor hours, and incurred variable overhead costs of $197,400 and fixed overhead costs of $696,000.
Predetermined variable overhead rate - $ 1.893
Predetermined fixed overhead rate - $5.680
1) Compute the applied overhead for Levitt for the year:
2) Compute the total overhead variance.