Answer:
Instructions are below.
Explanation:
Giving the following information:
The normal production capacity for this putter is 100,000 units per year. The total budgeted overhead at normal capacity is $500,000 comprised of $200,000 of variable costs and $300,000 of fixed costs.
Platt produced 85,000 putters, worked 89,000 direct labor hours, and incurred variable overhead costs of $160,000 and fixed overhead costs of $300,000.
First, we need to calculate the estimated overhead rate:
Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Variable= 200,000/100,000= $2 per direct labor hour
Fixed= 300,000/100,000= $3 per direct labor hour
Total= $5
Now, we can allocate overhead:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 89,000*5= $445,000
Finally, the total overhead variance:
TOTAL OVERHEAD VARIANCE = Actual Factory Overhead - Standard Factory Overhead
TOTAL OVERHEAD VARIANCE= 460,000 - 445,000
TOTAL OVERHEAD VARIANCE = $15,000 unfavorable