Price Company\'s flexible budget shows $10,710 of overhead at 75% of capacity, w

Question

Price Company's flexible budget shows $10,710 of overhead at 75% of capacity, which was the operating level achieved during May. However, the company applied overhead to production during May at a rate of $2.00 per direct labor hour based on a budgeted operating level of 6,120 direct labor hours (90% of capacity). If overhead actually incurred was $11,183 during May, the controllable variance for the month was:
A) $ 473 unfavorable.
B) $ 473 favorable.
C) $1,530 favorable.
D) $1,530 unfavorable.
E) $1,057 favorable.

Explanation / Answer

b

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