Question

The following data relate to factory overhead cost for the production of 6,000 computers: Actual: Variable factory overhead $142,600 Fixed factory overhead 35,000 Standard: 6,000 hrs. at $28 168,000 If productive capacity of 100% was 10,000 hours and the total factory overhead cost budgeted at the level of 6,000 standard hours was $182,000, determine the variable factory overhead controllable variance, fixed factory overhead volume variance, and total factory overhead cost variance. The fixed factory overhead rate was $3.5 per hour. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Answer 1

Answer:

1. $4,400 Favorable

2. $14,000 Unfavorable

3. $9,600 Unfavorable

Explanation:

The computation of given question is shown below:-

1. Variable factory overhead Controllable Variance

= $142,600 - 6,000 × 24.5

= $142,600 - $147,000

= -$4,400

= $4,400 Favorable

Where, 24.5 = standard rate - fixed overhead rate

= $28 - $3.5

= $24.5

2. Fixed factory overhead volume variance

= $35,000 - 6,000 × $3.5

= $35,000 - $21,000

= $14,000 Unfavorable

3. Total factory overhead cost variance

= ($142,600 + $35,000) - (6,000 × $28)

= $177,600 - $168,000

= $9,600 Unfavorable