Question

# Primara Corporation has a standard cost system in which it applies overhead to products based on...

Primara Corporation has a standard cost system in which it applies overhead to products based on the standard direct labor-hours allowed for the actual output of the period. Data concerning the most recent year appear below: Total budgeted fixed overhead cost for the year \$ 476,000 Actual fixed overhead cost for the year \$ 471,500 Budgeted direct labor-hours (denominator level of activity) 70,000 Actual direct labor-hours 71,000 Standard direct labor-hours allowed for the actual output 68,000 Required: 1. Compute the fixed portion of the predetermined overhead rate for the year. (Round Fixed portion of the predetermined overhead rate to 2 decimal places.) 2. Compute the fixed overhead budget variance and volume variance. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.). Input all amounts as positive values.)

 Req 1. Budgeted Fixed overheads 476000 Divide: Budgeted DLH 70000 Budgeted Fixed OH per DLH 6.8 Req 2. Budgeted Fixed OH: 476000 Actual Fixed OH: 471500 Sd DLH allowed 68000 Std gixed OH per DLH: 6.8 Std Fixed OH allowed: 462400 (68000*6.80) Fixed OH budget variance = Budgeted Fixed OH -Actual Fixed OH 476000 - 471500 = 4500 Fav Fixed OH Volume variance = Std fixed OH allowed - Budgeted Fixed oh 462400- 476000 = 13600 Unfav

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