Question

Budgeted overhead for Gallo, Inc. at normal capacity of 60,000 direct labor hours is $3 per hour variable and $2 per hour fixed. In July, $310,000 of overhead was incurred in working 63,000 hours when 64,000 standard hours were allowed. What is the overhead controllable variance

Answer 1

Answer:

See below

Explanation:

The overhead controllable variance is computed as

= (Actual overhead hour - Standard overhead hour) × Standard fixed overhead hour

Given that;

Actual overhead hour = 64,000

Standard overhead hour = 63,000

Standard fixed overhead hour = $2

Then,

= (64,000 - 63,000) × $2

= $2,000 favorable

Therefore , the overhead controllable variance is $2,000 favorable