Gerhan Company\'s flexible budget for the units actually manufactured in May sho

Question

Gerhan Company's flexible budget for the units actually manufactured in May shows $14,775 of total factory overhead; this output level represents 67.00% of available capacity. During May the company applied overhead to production at the rate of $2.80 per direct labor hour (DLH), based on a denominator volume level of 5,792 DLHs, which represents 85.00% of available capacity. The company spent 4,800 DLHs and incurred $15,880 of total factory overhead cost during May, including $6,560 for fixed factory overhead. Under a three-variance breakdown (decomposition) of the total overhead variance, what is the total factory overhead spending variance for May? $829 unfavorable $3,097 unfavorable $2,845 favorable N/A-this variance does not exist in a three-variance analysis of the total overhead variance. $276 unfavorable

Explanation / Answer

Factory overhead spending variance = Actual factory overhead expenses incured - Budgeted factory overhead Unfavourable variance means actual factory overhead is more than the budgeted overhead. $ Actual Factory overhead               15,880 Less: Budgeted total factory overhead             (14,775) Total factory overhead spending variance                 1,105 Factory overhead spending variance = 1,105 unfavourable N/A- this variance does not exist in a three-variance analysis of the total overhead variance.

Related Questions

Navigate

• Browse (All)
• Browse G
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.