Factory Overhead Cost Variances The following data relate to factory overhead co

Question

Factory Overhead Cost Variances

The following data relate to factory overhead cost for the production of 8,000 computers:

If productive capacity of 100% was 13,000 hours and the factory overhead cost budgeted at the level of 8,000 standard hours was $335,250, determine the variable factory overhead Controllable Variance, fixed factory overhead volume variance, and total factory overhead cost variance. The fixed factory overhead rate was $6.25 per hour. Use the minus sign to enter favorable variances as negative numbers.

Variance

Actual: Variable factory overhead $246,400 Fixed factory overhead 81,250 Standard: 8,000 hrs. at $38.00 304,000

Explanation / Answer

Hi,

Please find the answers as follows:

Controllable variance = 246400 - 254000 = -7600 (F)

Volume Variance = 81250 - 8000*6.25 = 31250 (U)

Total Factory Overhead Cost Variance = 31250 - 7600 = 23650 (U)

Thanks.

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