Question

A company's flexible budget for the range of 35,000 units to 45,000 units of production showed variable overhead costs of $3.80 per unit and fixed overhead costs of $74,000. The company incurred total overhead costs of $209,800 while operating at a volume of 40,000 units. The total controllable cost variance is:Multiple Choice$16,200 unfavorable.$10,000 favorable.$2,800 unfavorable.$2,800 favorable.$16,200 favorable.

Answer 1

Answer:

$16,200 favorable

Explanation:

The computation of the total controllable cost variance is shown below:

= Budgeted overhead - actual overhead

= (40,000 units × $3.80 + $74,000)  - $209,800

= ($152,000 + $74,000) - $209,800

= $226,000 - $209,800

= $16,200 favorable

Hence, the  total controllable cost variance is $16,200 favorable