World Company expects to operate at 80% of its productive capacity of 68,750 uni

Question

World Company expects to operate at 80% of its productive capacity of 68,750 units per month. At this planned level, the company expects to use 31,900 standard hours of direct labor. Overhead is allocated to products using a predetermined standard rate based on direct labor hours. At the 80% capacity level, the total budgeted cost includes $70,180 fixed overhead cost and $405,130 variable overhead cost. In the current month, the company incurred $473,000 actual overhead and 28,900 actual labor hours while producing 52,000 units. Compute the overhead volume variance. (Round all your intermediate calculations to 2 decimal places.) Compute the overhead controllable variance

Explanation / Answer

2

Fixed OH per DL hr. 70180/31900 2.2 Standard DL hours=31900/(68750*.80)*52000 30160 Fixed OH applied 66352

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