Johnston Equipment Develops Food Processing Equipment

Essay

Johnston Equipment develops food processing equipment.The budgeted fixed overhead costs for 2018 total $768,000.The company uses direct labour-hours for fixed overhead allocation and anticipates 480,000 hours during the year for 960,000 units.An equal number of units are budgeted for each month.During April 84,000 packages (units)were produced and $66,000 was spent on fixed overhead.Required:
a.Determine the fixed overhead rate for 2018 based on direct labour-hours.
b.Determine the fixed overhead static-budget variance for April.
c.Determine the production-volume overhead variance for April.