The following data relate to factory overhead cost for the production of 7,000 c
ID: 2469967 • Letter: T
Question
The following data relate to factory overhead cost for the production of 7,000 computers:
41,250
If productive capacity of 100% was 11,000 hours and the factory overhead cost budgeted at the level of 7,000 standard hours was $148,000, determine the variable factory overhead Controllable Variance, fixed factory overhead volume variance, and total factory overhead cost variance. The fixed factory overhead rate was $3.75 per hour. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. I have found the controllable variance but cannot figure out the volumn variance or the total factory overhead cost variance. Please help!
Actual: Variable factory overhead $103,500 Fixed factory overhead41,250
Standard: 7,000 hrs. at $19 133,000Explanation / Answer
Actual variable factory overhead cost incurred $103,500
Budgeted variable factory overhead 106,750 [7,000 x ($19.00 - 3.75)
Favorable Variance=106,750-103,500=$3,250
Productive capacity 11,000
Standard for amount produced 7,000
Productive Capacity not used 4,000
Standard fixed factory overhead rate $3.75
Unfavorable variance =3.75*(11000-7000)=$15,000
Total=-15000+3250=$11,750 (unfavorable)
Total factory overhead cost variance-Unfavorable 17,700
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