Factory Overhead Variance Corrections The data related to Shunda Enterprises Inc
ID: 2447825 • Letter: F
Question
Factory Overhead Variance Corrections
The data related to Shunda Enterprises Inc.'s factory overhead cost for the production of 100,000 units of product are as follows:
Productive capacity at 100% of normal was 130,000 hours, and the factory overhead cost budgeted at the level of 132,000 standard hours was $956,000. Based on these data, the chief cost accountant prepared the following variance analysis:
Compute the following to assist you in identifying the errors in the factory overhead cost variance analysis. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Round your interim computations to the nearest cent, if required.
Actual: Variable factory overhead $458,000 Fixed factory overhead 494,000 Standard: 132,000 hrs. at $7.30 ($3.50 for variable factory overhead) 963,600Explanation / Answer
Variable Factory Overhead Controllable Variance Standared variable overhead Actual Varaince SH *SR =132000*3.50 Given 462000 458000 4000 Favorable Productive capacity at 100% 130000 Standard for amount produced 1,32,000 Productive capacity overemployed 2,000 Standard fixed factory overhead rate (7.30-3.50) 3.8 Variance favourable 7600 Favorable Total factory overhead cost variance 11600 Favorable
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