Answer:
Overhead volume variance = $3,000 Unfavorable
Overhead controllable variance = $26,500 unfavorable
Explanation:
As per the data given in the question,
a)
Number of units produced = 80% × 66,250
= 53,000 units
Standard = 26,500 hours ÷ 53,000 units
= 0.5 direct labor hour per unit
Particulars a b Direct labor hour(a ÷ b)
Variable overhead rate $331,250 26,500 $12.5 per hour
Fixed overhead rate $53,000 26,500 $2 per hour
Total overhead rate $384,250 $15 per hour
The standard hours to produce 50,000 units = 25,000 (50,000 units × 0.50 hours per unit.)
Applied fixed overhead = $2 × 25,000
= $50,000
Overhead fixed volume variance is
= $53,000 - $50,000
= 3,000 unfavorable
Now
b) Standard hour = 50,000 units × 0.5 direct labor hour per unit
= 25,000
Overhead rate(a) Standard hours(b) Applied overhead(a × b) Actual variance
Variable overhead $12.5 25,000 $312,500
Fixed overhead $2 25,000 $50,000
Total overhead $14.5 25,000 $362,500 $389,000
= $362,500 - $389,000
$26,500 unfavorable
If the actual cost is more than the standard one than the variance should be unfavorable and If the actual cost is less than the standard one than the variance should be favorable
