Question

actory Overhead Cost Variances The following data relate to factory overhead cost for the production of 4,000 computers: Actual: Variable factory overhead $87,300 Fixed factory overhead 33,000 Standard: 4,000 hrs. at $28 112,000 If productive capacity of 100% was 6,000 hours and the total factory overhead cost budgeted at the level of 4,000 standard hours was $123,000, determine the variable factory overhead Controllable Variance, fixed factory overhead volume variance, and total factory overhead cost variance. The fixed factory overhead rate was $5.5 per hour. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Variance Amount Favorable/Unfavorable Controllable variance $ Favorable Volume variance $ Unfavorable Total factory overhead cost variance $ Unfavorable Feedback

Answer 1

Answer:

Variable Factory Overhead Controllable Variance = $2700 F

Fixed Factory Overhead Volume Variance = $11,000 U

Total Factory Overhead Cost Variance = $8,300 U

Explanation:

According to the scenario, computation of the given data are as follow:-

Variable Factory Overhead Controllable Variance = Actual Variable Factory Overhead - Standard Hours × (Standard Rate - Fixed Factory Overhead Rate)

= $87,300 - 4000 × ($28 - $5.5)

= $87,300 - 4000 × $22.5

= -$2,700 (Negative shows Favorable )

Fixed Factory Overhead Volume Variance = Fixed Factory Overhead - (Factory Overhead Cost × Fixed Factory Overhead Rate)

= $33,000 - 4000 × $5.5

= $33,000 - $22,000 = $11,000  (Positive shows Unfavorable  )

Total Factory Overhead Cost Variance = Actual Variable Factory Overhead + Fixed Factory Overhead - (Standard Hours × Standard Rate)

= $87,300 + $33,000 - (4,000 × $28)

= $120,300 - $112,000 = $8,300 unfavorable