Question

Bellingham Company produced 3,900 units of product that required 4.5 standard hours per unit. The standard variable overhead cost per unit is $5.60 per hour. The actual variable factory overhead was $102,410. 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.

Answer 1

The variable factory overhead controllable variance for Bellingham Company is calculated by subtracting the standard cost ($98,280) from the actual cost incurred ($102,410), resulting in an unfavorable variance of $4,130.

Step-by-step explanation:

To determine the variable factory overhead controllable variance for Bellingham Company, we first need to calculate the standard variable overhead cost based on the given standards: 3,900 units at 4.5 standard hours per unit and a standard variable overhead cost of $5.60 per hour. Multiplying the number of units by the standard hours per unit gives us the total standard hours (3,900 units * 4.5 hours/unit = 17,550 standard hours). We then multiply the total standard hours by the standard cost per hour to find the standard cost (17,550 hours * $5.60/hour = $98,280).

The actual variable factory overhead is given as $102,410. The variable overhead controllable variance is found by subtracting the standard cost from the actual cost incurred. In this case, it is $102,410 - $98,280, which equals $4,130. Since the actual cost is higher than the standard cost, the variance is unfavorable.

Therefore, the variable factory overhead controllable variance is an unfavorable $4,130.