FPOHR = Fixed portion of the predetermined overhead rate DH = Denominator hours. SH = Standard hours allowed for actual output[r]
(1)PowerPoint Authors:
Susan Coomer Galbreath, Ph.D., CPA Charles W Caldwell, D.B.A., CMA Jon A Booker, Ph.D., CPA, CIA Cynthia J Rooney, Ph.D., CPA
Copyright © 2014 by The McGraw-Hill Companies, Inc All rights reserved.
Predetermined Overhead
Rates and Overhead Analysis
in a Standard Costing System
(2)Learning Objective 11-4
Compute and interpret
the fixed overhead
volume and budget
(3)Volume
variance
Variance
Fixed Overhead
Applied
Actual Fixed Overhead Budgeted
Fixed Overhead
Volume variance
Fixed overhead applied to
work in process Budgeted
fixed overhead
(4)FPOHR = Fixed portion of the predetermined overhead rate DH = Denominator hours
SH = Standard hours allowed for actual output
SH × FR DH × FR
Fixed Overhead Volume
Variance
Volume variance = FPOHR × (DH – SH) Fixed
Overhead Applied
Actual Fixed Overhead Budgeted
Fixed Overhead
(5)Budget
variance
Variance
Budget variance
Budgeted fixed overhead Actual
fixed overhead
= –
Fixed Overhead
Applied
Actual Fixed Overhead Budgeted
(6)Predetermined Overhead Rates
Predetermined overhead rate
Estimated total manufacturing overhead cost Estimated total amount of the allocation base =
Predetermined overhead rate
$360,000
90,000 Machine-hours =
Predetermined
(7)Predetermined Overhead Rates
Variable component of the predetermined overhead rate
$90,000
90,000 Machine-hours =
Variable component of the
predetermined overhead rate = $1.00 per machine-hour
Fixed component of the predetermined overhead rate
$270,000
90,000 Machine-hours =
Fixed component of the