Reference no: EM133113975

Question - The following budget and actual production information has been provided to you by Cape Medical Manufacturers:

Budgeted factory overhead:
Variable	$324000
Fixed	$480,000	$804,000
Budgeted direct labour hours		60,000 hours
Actual overhead incurred:
Variable	$322,000
Fixed	$484,600	$806,600
Actual direct labour hours		59,500 hours

Required -

1. Calculate the predetermined budgeted factory overhead rate for the year based on Direct Labour Hours.

2. Calculate the amount of factory overhead applied in the year.

3. Calculate the under or over-applied overhead for the year.

4. Calculate both the spending and capacity variances.

5. Explain possible causes of the spending and capacity variances.