eBook Calculator Factory Overhead Cost Variances The following data relate to fa
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Factory Overhead Cost Variances
The following data relate to factory overhead cost for the production of 6,000 computers:
If productive capacity of 100% was 10,000 hours and the factory overhead cost budgeted at the level of 6,000 standard hours was $224,000, determine the variable factory overhead Controllable Variance, fixed factory overhead volume variance, and total factory overhead cost variance. The fixed factory overhead rate was $6.5 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 $154,200 Fixed factory overhead 65,000 Standard: 6,000 hrs. at $33 198,000Explanation / Answer
Controlled variance = Actual variable factory overhead cost incurred - Budgeted variable factory overhead 210,000 = 154200 - (6000*(33-6.5)) = - 4800 =4800 Favorable
Volume variance = standard fixed factory overhead rate * (Productive capacity - Standard for amount produced) = 6.50 *(10000 - 6000) = 26000 Unfavorable
Total factory overhead cost variance = 4800 favorable + 26000 Unfavorable = 21200 Unfavorable
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