Levelor Company\'s flexible budget shows $10,790 of overhead at 75% of capacity,

Question

Levelor Company's flexible budget shows $10,790 of overhead at 75% of capacity, which was the operating level achieved during May. However, the company applied overhead to production during May at a rate of $2.20 per direct labor hour based on a budgeted operating level of 6,200 direct labor hours (90% of capaclty), If overhead actually Incurred was $11.271 during May, the controllable varlance for the month was: O $481 unfavorable. O $481 favorable. O $2.850 favorable. O $2,850 unfavorable O $2,369 favorable.

Explanation / Answer

A. $481 unfavorable

Flexible budget overhead (given) $10,790 Actual overhead incurred (given) $11,271 Total controllable variance $481 U

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