Brown Company Makes Watches

Brown Company makes watches.The budgeted fixed overhead costs for 2016 total $324,000.The company uses direct labour-hours for fixed overhead allocation and anticipates 10,800 hours during the year for 540,000 units.An equal number of units are budgeted for each month.
During October,48,000 watches were produced and $28,000 was spent on fixed overhead.
Required:
a.Determine the fixed overhead rate for 2016 based on the units of input.
b.Determine the fixed overhead static-budget variance for October.
c.Determine the production-volume overhead variance for October.

Correct Answer:

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a.Fixed overhead rate = $324,000/10,800 ...

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