Bhimani, Horngren,
Datar and Rajan,
Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012
Manufacturing Overhead Variable-overhead rate = SKr 64,000
*
÷ 8,000
*
hours = SKr 8.00 per standard labour- hour Budgeted fixed overhead costs = SKr 197,600
*
− 10,000
×
(SKr 8.00) = SKr 117,600 If total manufacturing overhead is allocated at 120% of direct standard manufacturing labour-hours, the single overhead rate must be 120% of SKr 16.00 or SKr 19.20 per hour. Therefore, the fixed-overhead component of the rate must be SKr 19.20 – SKr
8.00, or SKr 11.20 per direct standard manufacturing labour-hour. Let D = denominator level in input units Budgeted fixed overhead rate per input unit
Budgeted fixed overhead costsDenominator level in input units SKr
11.20
= DD standard direct manufacturing labour-hours A summary variance
analysis for October follows Share with your friends: 
