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The following information relates to manufacturing overhead for the Chapman Comp

ID: 2361301 • Letter: T

Question

The following information relates to manufacturing overhead for the Chapman Company:

Standards:

Total fixed factory overhead: $450,000

Estimated production:25,000 units (100% of capacity)

Overhead rates are based on machine hours:

Standards hours allowed per unit produced: 2

Fixed overhead rate: $9.00 per machine hour

Variable overhead rate: $3.50 per hour

Actual:

Fixed factory overhead : $450,000

Production: 24,000 units

Variable overhead: $170,000

Questions:

A Compute the volume variance and is it favorable or unfavorable

B. Compute the controllable variance and is it favorable or unfavorable

Explanation / Answer

A)volume variance is 25000-24000(units)=1000units yes,it is favorable as the actual production is just a 1000units less to that of the standard production. B)controllable variance is the difference of $170,000 and $3.50 and is not favorable as the difference varies much which ultimately effects the production . C)total factory overhead cost variance is the difference between the overhead costs of standard production and the actual production. yes it is favorable because there is no variance between the and hence the production unit rates continues in manufacturing the machines.