19. World Company expects to operate at 80% of its productive capacity of 50,000

Question

19.

World Company expects to operate at 80% of its productive capacity of 50,000 units per month. At this planned level, the company expects to use 24,400 standard hours of direct labor. Overhead is allocated to products using a predetermined standard rate of 0.610 direct labor hours per unit. At the 80% capacity level, the total budgeted cost includes $53,680 fixed overhead cost and $273,280 variable overhead cost. In the current month, the company incurred $320,000 actual overhead and 21,400 actual labor hours while producing 37,000 units.

(1) Compute the overhead volume variance.
(2) Compute the overhead controllable variance.

Required 1

Required 2

Compute the overhead volume variance. Classify as favorable or unfavorable. (Round "OH costs per DL hour" to 2 decimal places.)

Required 1

Required 2

Compute the overhead controllable variance. Classify as favorable or unfavorable.

Explanation / Answer

1 Fixed Overhead Applied Fixed OH per DL hr. 2.2 Standard DL hours 22570 Fixed OH applied 49654 World Company's budget assumed the production of 40,000 Fixed OH per DL hr. 53,680/24,400 2.2 Compute the overhead volume variance. Total fixed OH applied 49654 Total budgeted fixed OH 53680 Fixed OH volume variance 4026 Unfavourable Overhead controllable variance Total OH Variance 17562 Fixed OH volume variance 4026 Overhead controllable Variance 13536 Unfavourable OH Rate Std Hrs Applied OH Actual Total OH Variance Variable Overhead 273280/24400 11.2 Fixed Over Head 2.2 Total Over head 13.4 22570 302438 320000 -17562 Unfavourable

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.