Abba Company produces sails for boats. The Houston plant uses a standard costing
ID: 2578246 • Letter: A
Question
Abba Company produces sails for boats. The Houston plant uses a standard costing system with the following standards and actuals.
Direct labor is the basis for applying variable and fixed overhead.
What is the dollar amount for Variable Overhead Applied?
Standards Direct Labor Standard Rate $ 12 Standard Usage 0.78 hours Variable Overhead Standard Rate $ 7 December Data Budgeted Production for December 28,571 Budgeted Fixed Overhead for December $ 42,606 Number of Sails Produced 108,357 Direct Labor Actual Usage 23,344 hours Actual Variable Overhead Costs $ 504,021 Actual Fixed Overhead Costs $ 150,038Explanation / Answer
variable overhead applied = actual no. of sails produced * standard variable cost per unit
= 108357 * ($ 7 * 0.78 hrs )
= $ 591629