Question

A company has budgeted fixed overhead of $1.00 per hour at expected capacity of 5,000 units which has a standard quantity of 2 hours per unit. The company actually produces 5,200 units and incurred total overhead costs of $12,000. The controllable variance is:

Answer 1

The actual answer is 2000 Favorable, not 2000 Unfavorable

Answer 2

Controllable variance= $1,600 unfavorable

Step-by-step explanation:

Giving the following information:

A company has a budgeted fixed overhead of $1.00 per hour at the expected capacity of 5,000 units which has a standard quantity of 2 hours per unit. The company produces 5,200 units and incurred total overhead costs of $12,000.

Controllable variance= actual overhead - budgeted overhead

Controllable variance= 12,000 - (5,200*2)= $1,600 unfavorable