Hopkins Clothiers is a small company that manufactures tall-men’s suits. The com
ID: 2453733 • Letter: H
Question
Hopkins Clothiers is a small company that manufactures tall-men’s suits. The company has used a standard cost accounting system. In May 2014, 11,200 suits were produced. The following standard and actual cost data applied to the month of May when normal capacity was 14,000 direct labor hours. All materials purchased were used.
Cost Element Standard (per unit) Actual Direct materials 8 yards at $4.40 per yard $375,575 for 90,500 yards ($4.15 per yard) Direct labor 1.20 hours at $13.40 per hour $200,220 for 14,200 hours ($14.10 per hour) Overhead 1.20 hours at $6.10 per hour (fixed $3.50; variable $2.60) $49,000 fixed overhead $37,000 variable overhead
Overhead is applied on the basis of direct labor hours. At normal capacity, budgeted fixed overhead costs were $49,000, and budgeted variable overhead was $36,400.
Compute the overhead controllable variance and the overhead volume variance. (Round answers to 0 decimal places, e.g. 125.)
Explanation / Answer
Calculation of overhead controllable variance:
Actual factory overhead (49000+37000)
$ 86,000
Budgeted allowance based on standard hours allowed:
Fixed expenses budgeted
$ 49,000
Variable expenses
$ 36,400
$ 85,400
Overhead controllable variance
$600 Unfavorable
Calculation of overhead controllable variance:
Actual factory overhead (49000+37000)
$ 86,000
Budgeted allowance based on standard hours allowed:
Fixed expenses budgeted
$ 49,000
Variable expenses
$ 36,400
$ 85,400
Overhead controllable variance
$600 Unfavorable
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