Question

g The Berwin Company established a master budget volume of 35,000 units for April. Actual overhead costs incurred amounted to $98,500. Actual production for the month was 34,000 units. The standard variable overhead rate was $1.75 per direct labor hour. The standard fixed overhead rate was $1.50 per direct labor hour. One direct labor hour is the standard quantity per finished unit. Assume the allocation base for fixed overhead costs is the number of direct labor hours. SR1a. A. Compute the total manufacturing overhead cost variance.

Answer 1

The actual overhead incurred = $98,500

The overhead applied = 34000 * 1 ( $1.75 + $1.50) = 34000*1*3.25  = $110,500

The budgeted overhead = 34000*1*$1.75 + (35000*1*1.50) =  (34000*1*$1.75)+52500 = $112,000

A) The total manufacturing overhead cost variance = Overhead applied - Actual overhead = $110,500 - $98,500 = $12,000 F