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Standard Cost System at Photos Inc.

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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.

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Solution Summary

This solution calculates the fixed portion of the predetermined overhead rate for the year. This solution also calculates the fixed overhead budget and volume variances. All calculations are shown.

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