The following data is given for the Bahia Company: The variable factory overhead
ID: 2564243 • Letter: T
Question
The following data is given for the Bahia Company:
The variable factory overhead controllable variance is
Budgeted production 1,088 units Actual production 909 units Materials: Standard price per pound $1.939 Standard pounds per completed unit 11 Actual pounds purchased and used in production 9,699 Actual price paid for materials $19,883 Labor: Standard hourly labor rate $14.24 per hour Standard hours allowed per completed unit 4.7 Actual labor hours worked 4,681.35 Actual total labor costs $71,391 Overhead: Actual and budgeted fixed overhead $1,192,000 Standard variable overhead rate $27.00 per standard labor hour Actual variable overhead costs $131,078 Overhead is applied on standard labor hours.Explanation / Answer
Controllable variance is the difference between actual overhead cost incurred and the budgeted allowance based on standard hours allowed for work perfomed.
Actual Variable Overhead Costs = $131,078
Standard Hours allowed per completed units = 4.7 hours
Total Number of Units completed = 909 Units
Total Standard Hours allowed for Actual Completed Units = 909 Units x 4.7 = 4,272.30 Hours
Standard Variable Overhead Rate = $27 per standard labor hour
Total Standard Variable Overheads allowed for actual production = 4272.30 hours x $27 = $115,352.10
Variable Factory Overhead Controllable Varinace = Actual Variable Overhead Costs - Standard Variable Overheads allowed for actual production
= $131,078 - $115,352.10
= $15,725.90 or $15,726 Unfavorable
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