The following information relates to manufacturing overhead for the Chapman Comp
ID: 2361301 • Letter: T
Question
The following information relates to manufacturing overhead for the Chapman Company:
Standards:
Total fixed factory overhead: $450,000
Estimated production:25,000 units (100% of capacity)
Overhead rates are based on machine hours:
Standards hours allowed per unit produced: 2
Fixed overhead rate: $9.00 per machine hour
Variable overhead rate: $3.50 per hour
Actual:
Fixed factory overhead : $450,000
Production: 24,000 units
Variable overhead: $170,000
Questions:
A Compute the volume variance and is it favorable or unfavorable
B. Compute the controllable variance and is it favorable or unfavorable
Explanation / Answer
A)volume variance is 25000-24000(units)=1000units yes,it is favorable as the actual production is just a 1000units less to that of the standard production. B)controllable variance is the difference of $170,000 and $3.50 and is not favorable as the difference varies much which ultimately effects the production . C)total factory overhead cost variance is the difference between the overhead costs of standard production and the actual production. yes it is favorable because there is no variance between the and hence the production unit rates continues in manufacturing the machines.
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