The following data relate to factory overhead cost for the production of 5,000 c

Question

The following data relate to factory overhead cost for the production of 5,000 computers:

If productive capacity of 100% was 8,000 hours and the total factory overhead cost budgeted at the level of 5,000 standard hours was $192,250, determine the variable factory overhead controllable variance, fixed factory overhead volume variance, and totalfactory overhead cost variance. The fixed factory overhead rate was $5.75 per hour. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Actual: Variable factory overhead $141,900 Fixed factory overhead 46,000 Standard: 5,000 hrs. at $35 175,000

Explanation / Answer

Variance Amount Fav./Unf.

Ans. Variable factory overhead controllable variance 4350 Favorable Fixed factory overhead volume variance 17250 Unfavorable Total Factory overhead cost variance 12900 Unfavorable *Variable overhead variance = Budgeted variable overhead - Actual variable overhead [5000 * (35 - 5.75)] - 141900 146250 - 141900 4350 *Fixed factory overhead variance   =   Budgeted fixed overhead - Actual fixed overhead (5000 * 5.75) - 46000 28750 - 46000 -17250 *Total Factory overhead cost variance   =   Variable overhead variance + Fixed overhead variance 4350 + (-17250) -12900

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