Everjoice Company Makes Clocks

Essay

Everjoice Company makes clocks. The budgeted fixed overhead costs for 2012 total $720,000. The company uses direct labour-hours for fixed overhead allocation and anticipates 240,000 hours during the year for 480,000 units. An equal number of units are budgeted for each month.
During June, 42,000 clocks were produced and $63,000 were spent on fixed overhead.
Required:
a. Determine the fixed overhead rate for 2012 based on units of input.
b. Determine the fixed overhead static-budget variance for June.
c. Determine the production-volume overhead variance for June.