Factory Overhead Cost Variances Blumen Textiles Corporation began April with a b
ID: 2530261 • Letter: F
Question
Factory Overhead Cost Variances
Blumen Textiles Corporation began April with a budget for 39,000 hours of production in the Weaving Department. The department has a full capacity of 52,000 hours under normal business conditions. The budgeted overhead at the planned volumes at the beginning of April was as follows:
The actual factory overhead was $189,400 for April. The actual fixed factory overhead was as budgeted. During April, the Weaving Department had standard hours at actual production volume of 41,000 hours. Determine the variable factory overhead controllable variance and the fixed factory overhead volume variance. 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.
a. Variable factory overhead controllable variance: $
b. Fixed factory overhead volume variance: $
Variable overhead $109,200 Fixed overhead 78,000 Total $187,200Explanation / Answer
Answer for a)
Variable factory overhead controllable variance:
(Actual variable factory overhead costs-(budgeted variable factory cost per unit×standard hours))
[Where,actual variable factory overhead cost:
Actual factory overhead costs-actual fixed overhead cost]
=($189400-$78000)-(($109200/39000hours)×41000hours)
=-$3400(favourable)
Answer for b)
As no volume is given,
Fixed factory overhead volume variance:
(Budgeted hours-standard hours for actual output)×
Predetermined fixed factory over head rate per unit
(39000hours-41000hours)×$78000/39000hours
=-$4000 (favourable)
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