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30 November, 13:36

actory Overhead Cost Variances The following data relate to factory overhead cost for the production of 4,000 computers: Actual: Variable factory overhead $87,300 Fixed factory overhead 33,000 Standard: 4,000 hrs. at $28 112,000 If productive capacity of 100% was 6,000 hours and the total factory overhead cost budgeted at the level of 4,000 standard hours was $123,000, determine the variable factory overhead Controllable Variance, fixed factory overhead volume variance, and total factory overhead cost variance. The fixed factory overhead rate was $5.5 per hour. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Variance Amount Favorable/Unfavorable Controllable variance $ Favorable Volume variance $ Unfavorable Total factory overhead cost variance $ Unfavorable Feedback

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  1. 30 November, 14:58
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    Variable Factory Overhead Controllable Variance = $2700 F

    Fixed Factory Overhead Volume Variance = $11,000 U

    Total Factory Overhead Cost Variance = $8,300 U

    Explanation:

    According to the scenario, computation of the given data are as follow:-

    Variable Factory Overhead Controllable Variance = Actual Variable Factory Overhead - Standard Hours * (Standard Rate - Fixed Factory Overhead Rate)

    = $87,300 - 4000 * ($28 - $5.5)

    = $87,300 - 4000 * $22.5

    = - $2,700 (Negative shows Favorable)

    Fixed Factory Overhead Volume Variance = Fixed Factory Overhead - (Factory Overhead Cost * Fixed Factory Overhead Rate)

    = $33,000 - 4000 * $5.5

    = $33,000 - $22,000 = $11,000 (Positive shows Unfavorable)

    Total Factory Overhead Cost Variance = Actual Variable Factory Overhead + Fixed Factory Overhead - (Standard Hours * Standard Rate)

    = $87,300 + $33,000 - (4,000 * $28)

    = $120,300 - $112,000 = $8,300 unfavorable
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