Reference no: EM132179722

Question - Peyton Company product a putter called PAR-putter. Payton uses a standard cost system and determined that it should take one hour of direct labor to produce one PAR- putter. The normal production capacity for this putter is 100,000 units per year. The total budgeted overhead at normal capacity is $500000 comprised of 200,000of variable costs and 300000 of fixed costs. Payton applies overhead on the basis of direct labor hours.

During the current year Payton produced 86000 putter worked 89000 direct labour hour and incurred variable overhead costs of 160000 and fixed overhead costs of $300000.

1) Compute the predetermined variable overhead rate and predetermined fixed overhead rate.

2) Compute the applied overhead for Payton for the year.

3) Compute the total overhead variance.