1–Tip Top Corp. produced 2,300 units of product that required 2 standard hours p

Question

1–Tip Top Corp. produced 2,300 units of product that required 2 standard hours per unit. The standard variable overhead cost per unit is $4.4 per hour. The actual variable factory overhead was $20,540. Determine the variable factory overhead controllable variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number............$ (favorable or unfavorable)?

2_Tip Top Corp. produced 4,600 units of product that required 3.5 standard hours per unit. The standard fixed overhead cost per unit is $1.64 per hour at 17,400 hours, which is 100% of normal capacity. Determine the fixed factory overhead volume variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number..............$ (favorable or unfavorable)?

Explanation / Answer

Anwer:-1)- Variable overhead controllable variance:-

              Actual variable Factory overhead-Budgeted variable factory overhead

              =$20540-{(2300 units*2 standard hours per unit)*$4.4 per hour}

              =$20540 - $20240

              =$300 Unfavourable

2)- Fixed factory overhead volume variance:-

   (Standard Hours for 100% of Normal capacity-Standard Hours for actual units produced)*Fixed factory overhead rate

= {17400 hours- (4600 units*3.5 standard hours per unit)}*$1.64 per hour

=(17400 hours – 16100 hours)*$1.64 per hour

=$2132 Unfavourable

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