Allegiant Company Uses Standard Costing Required:
A

question 101

Essay

Allegiant Company uses standard costing. Overhead is applied to products on the basis of standard direct labour hours for actual production. The company provided the following data: $$\begin{array} { l r } \text { Standard direct labour hours allowed for actual output } & 100,000 \\\text { Actual direct labour hours } & 125,000 \\\text { Direct labour hours budgeted in the master budget } & 140,000 \\\text { Budgeted total fixed overhead cost } & \$ 280,000 \\\text { Actual fixed overhead cost } & \$ 300,000\end{array}$$ Required:
A. Calculate the fixed overhead rate.
B. Calculate the total fixed overhead applied to production.
C. Calculate the fixed overhead spending variance.
D. Calculate the fixed overhead volume variance.
E. Calculate the total fixed overhead variance.

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Definitions:

Direct Labor Cost

Refers to the total amount paid to workers directly involved in the production of goods or services, including wages and other related expenses.

Predetermined Overhead Rate

An estimated rate used to charge overhead costs to products or job orders, based on a selected allocation base anticipated before the accounting period.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to products based on a specific activity base.

Machine-Hours

A measure of production output or capacity, indicating the total hours that machinery is operated over a specific period.