aProportion
budgeted variable overhead
of variable overhead =
budgeted total overhead
$1,166,400
=
$1,944,000
= 60%
total overhead variable
Variable overhead rate =
rate overhead proportion
= ($10.80) (.6)
= $6.48
3. Lyan Company’s assistant purchasing manager is not acting ethically. The details
of the bid submitted by Bair Company are confidential between Bair Company and
Lyan Company. It is unfair and unethical to give this information to Bair’s
competitor. If Lyan Company had wanted competing bids on the specialized
equipment, the bids should have been solicited at the same time from the relevant
set of manufacturers. Each competing firm should receive the same specifications
on the customized equipment and be given the same time frame in which to
complete the bid. Moreover, the competing firms should be made aware that more
than one bid is being solicited.