Johnston Equipment Develops Food Processing Equipment

Johnston Equipment develops food processing equipment.The budgeted fixed overhead costs for 2015 total $768,000.The company uses direct labour-hours for fixed overhead allocation and anticipates 480,000 hours during the year for 960,000 units.An equal number of units are budgeted for each month.
During April 84,000 packages (units)were produced and $66,000 was spent on fixed overhead.
Required:
a.Determine the fixed overhead rate for 2015 based on direct labour-hours.
b.Determine the fixed overhead static-budget variance for April.
c.Determine the production-volume overhead variance for April.

Correct Answer:

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a.Fixed overhead rate = $768,000/480,000...

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