In October, Glazier Inc. reports 42,000 actual direct labor hours, and it incurs

Question

In October, Glazier Inc. reports 42,000 actual direct labor hours, and it incurs $194,000 of manufacturing overhead costs. Standard hours allowed for the work done is 40,000 hours. The flexible manufacturing overhead budget shows that budgeted costs are $3.80 variable per direct labor hour and $60,000 fixed.

Compute the manufacturing overhead controllable variance. Identify whether the variance is favorable or unfavorable?

Explanation / Answer

Manufacturing overhead controllable variance = Actual overhead expense - (budgeted overhead per unit x standard number of units) Manufacturing overhead controllable variance = 194,000 - (40,000*3.80 + 60,000) Manufacturing overhead controllable variance = 194,000 - 212,000 Manufacturing overhead controllable variance = 18,000 F

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