The standard costs and actual costs for factory overhead for the manufacture of

Question

The standard costs and actual costs for factory overhead for the manufacture of 2,500 units of actual production are as follows:

Standard Costs
Fixed overhead (based on 10,000 hours) 3 hours @ $.80 per hour
Variable overhead 3 hours @ $2 per hour

Actual Costs

Total variable cost, $18,000
Total fixed cost, $8,000



The amount of the factory overhead volume variance is:
Answer
Question 12 answers
$2,000 favorable
$2,000 unfavorable
$2,500 unfavorable
$0

13. Diamond Company produces a chair that requires 5 yds. of material per unit. The standard price of one yard of material is $7.50. During the month, 8,500 chairs were manufactured, using 43,700 yards at a cost of $7.60. Determine the (a) price variance, (b) quantity variance, and (c) cost variance.

14. The Finishing Department of Paragon Manufacturing Co. prepared the following factory overhead cost budget for October of the current year, during which it expected to operate at a 100% capacity of 10,000 machine hours:

Variable cost:
Indirect factory wages
$18,000

Power and light
12,000

Indirect materials
4,000

Total variable cost
$34,000
Fixed cost:
Supervisory salaries
$12,000

Depreciation of plant and
equipment
8,800

Insurance and property taxes
3,200

Total fixed cost
24,000
Total factory overhead
$58,000


During October, the plant was operated for 9,000 machine hours and the factory overhead costs incurred were as follows: indirect factory wages, $16,400; power and light, $10,000; indirect materials, $3,000; supervisory salaries, $12,000; depreciation of plant and equipment, $8,800; insurance and property taxes, $3,200.

Prepare a factory overhead cost variance report for October. (The budgeted amounts for actual amount produced should be based on 9,000 machine hours.)

Explanation / Answer

for question number 12 answer is $12000 favarable since over head volume variance = ACTUAL HOURS ALLOWED [ Actual rate - Standard rate] here actual hours = 10000 (base) actual rate = (18000+8000) / 10000 hours standard rate = $2.00+$0.80 = $2.80 therfore OVV = AH[AR-SR] =10000*[2.6-2.80] =$2000 FAVOURBLE FOR 13. Metirial price variance = AQ[ AP-SP] = 43700[$7.60-$7.50] =$4370 U Metierial quantity variance = SP*[AQ-SQ] $7.50*[43700-42500] = $7.50*(1200) $9000 U FOR 14 TH Factory over head rate variance = AH[AR-SR] Here AR = [53400] / 9000 HOURS = $5.93 SR = [58000 / 10000 HOURS] = $5.80 Ther fore Over head rate variance : = 9000*[5.93-5.80] = 9000*0.13 $1170

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