The following data relate to factory overhead cost for the production of 5,000 c

Question

The following data relate to factory overhead cost for the production of 5,000 computers:

If productive capacity of 100% was 8,000 hours and the factory overhead cost budgeted at the level of 5,000 standard hours was $112,000, determine the variable factory overhead Controllable Variance, fixed factory overhead volume variance, and total factory overhead cost variance. The fixed factory overhead rate was $4.00 per hour. Use the minus sign to enter favorable variances as negative numbers.

The following data relate to factory overhead cost for the production of 5,000 computers:

Actual: Variable factory overhead $77,600 Fixed factory overhead 32,000 Standard: 5,000 hrs. at $20.00 100,000

If productive capacity of 100% was 8,000 hours and the factory overhead cost budgeted at the level of 5,000 standard hours was $112,000, determine the variable factory overhead Controllable Variance, fixed factory overhead volume variance, and total factory overhead cost variance. The fixed factory overhead rate was $4.00 per hour. Use the minus sign to enter favorable variances as negative numbers.

Explanation / Answer

Variable factory overhead Controllable Variance =77600 -5000*16= -$2400 =$2400 Favorable

fixed factory overhead volume variance, = 32000-5000*4 = $12000 = $12000 Unfavorable

Total factory overhead cost variance =(77600+32000)-(5000*20) = $9600 =$9600 Unfavorable

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