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Alvarez Company for the current period shows a $25,000 favorable volume variance and a $57,800 unfavorable controllable variance. Standard overhead applied for the period is $222,000.

What is the actual total overhead cost incurred for the period?
(A) $267,800
(B) $247,800
(C) $222,000
(D) $194,200

1 Answer

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Final answer:

The actual total overhead cost incurred for the period can be calculated by adjusting the standard overhead applied with the given variances. However, the calculation does not match the provided options, which highlights a potential error in the question or options.

Step-by-step explanation:

To calculate the actual total overhead cost incurred for the period, we need to consider the standard overhead applied and add or subtract the variances. The standard overhead applied is $222,000. We have a $25,000 favorable volume variance, which indicates that the actual overhead is less than applied overhead due to a higher volume of production. Conversely, we have an unfavorable controllable variance of $57,800, which indicates that the actual overhead is more than what was expected. To get the actual total overhead cost, we adjust the standard overhead applied by these variances.

Therefore, the calculation is:

Actual Total Overhead Cost = Standard Overhead Applied + Unfavorable Controllable Variance - Favorable Volume Variance

Actual Total Overhead Cost = $222,000 + $57,800 - $25,000

Actual Total Overhead Cost = $254,800

However, none of the given options matches this calculation, indicating a potential mistake in the question or the provided options. If the student has this same calculation result, they should consider discussing it with their lecturer or teacher for clarification.

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