Zero Company\'s standard factory overhead rate is $3.72 per direct labor hour (D
ID: 2473812 • Letter: Z
Question
Zero Company's standard factory overhead rate is $3.72 per direct labor hour (DLH), calculated at 90.00% capacity = 900 standard DLHs. In December, the company operated at 79.00% of capacity, or 790 standard DLHs. Budgeted factory overhead at 79.00% of capacity is $3,138, of which $1,350 is fixed overhead. For December, the actual factory overhead cost was $3,790 for 841 actual DLHs, of which $1,300 was for fixed factory overhead. Under a three-way breakdown (decomposition) of the total overhead variance, what is the total factory overhead spending variance for Zero Company in December? A) $537 unfavorable B) $165 unfavorable C) $587 unfavorable D) $115 unfavorable E) N/A—this variance doesn't exist under a three-way breakdown of the total overhead variance. Zero Company's standard factory overhead rate is $3.72 per direct labor hour (DLH), calculated at 90.00% capacity = 900 standard DLHs. In December, the company operated at 79.00% of capacity, or 790 standard DLHs. Budgeted factory overhead at 79.00% of capacity is $3,138, of which $1,350 is fixed overhead. For December, the actual factory overhead cost was $3,790 for 841 actual DLHs, of which $1,300 was for fixed factory overhead. Under a three-way breakdown (decomposition) of the total overhead variance, what is the total factory overhead spending variance for Zero Company in December? A) $537 unfavorable B) $165 unfavorable C) $587 unfavorable D) $115 unfavorable E) N/A—this variance doesn't exist under a three-way breakdown of the total overhead variance.Explanation / Answer
Variable overhead variance = Standard variable Overhead - Actual Variable Overhead
Standard Variable overhead = 3138 - 1350 =$1788
Actual Overhead = 3790 - 1300 = 2490
Variable overhead variance = 1788 -2490 = $702 U
Fixed Overhead Variance = Standard fixed Overhead - Actual Fixed Overhead
= 1350 - 1300 = 50 F
Total overhead variance = 702 - 50
= 652U
So the answer is D
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.