Posted: May 3rd, 2016

Compute the fixed overhead budget and volume variances?

Photos Inc. has a standard cost system in which it applies overhead to products based on the standard direct labor hours allowed for the actual output of the period. Data concerning the ost recent year appear below:

Total budgeted fixed overhead cost for the year $250,000
Actual fixed overhead cost for the year $265,000
Budgeted standard direct labor hours $40,000
Actual direct labor hours $41,000
Standard direct labor hours allowed for actual output $40,800

a. Compute the fixed portion of the predetermined overhead rate for the year. Show computations.
b. Compute the fixed overhead budget and volume variances. Show computations.

Grater Inc. sells product A and product B. Revenue and cost information relating to the products follow:

Common fixed expenses in the company total $390,000 annually. Last year the company produced and sold 10,000 of Product A and 15,000 of Product B.

Prepare a contribution format income statement for the year segmented by product lines. Show details clearly.