Question

Bellingham Company produced 2,500 units of product that required 6 standard direct labor hours per unit. The standard variable overhead cost per unit is $4.90 per direct labor hour. The actual variable factory overhead was $71,150. Determine the variable factory overhead controllable variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number

Answer 1

Answer: -$2,350

Explanation:

First we will calculate the labour costs of the product as,

Standard labour overheads required,

= 2,500*6

= $15,000

Using the above figure we will then calculate the Standard Overhead Cost as,

Standard overhead cost

= 4.9* 15,000 hours

= $73,500

But the Actual overhead cost = $71,150

The Variance is calculated as,

= standard overhead cost - actual overhead cost

= 73,500 - 71,150

= $2,350 Favorable.

= -$2,350

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