Question

Cralic's actual overhead costs for the period was $397,000. Cralic's overhead applied using the standard rate was $390,000. The controllable overhead variance is:

A) $7,000
B) $3,000
C) Unable to tell from data given
D) None of the above

Answer 1

The controllable overhead variance for Cralic is the difference between actual and applied overhead costs, which is $7,000, making Option A) $7,000 the correct answer.

Step-by-step explanation:

The controllable overhead variance is the difference between the actual overhead costs and the overhead costs applied using the standard rate. In this given case, Cralic's actual overhead costs for the period were $397,000, and Cralic's overhead applied using the standard rate was $390,000. Thus, the variance is calculated by subtracting the applied costs from the actual costs, which equals $7,000 (Actual Overhead - Applied Overhead = $397,000 - $390,000 = $7,000).

The correct answer to the question 'Cralic's actual overhead costs for the period was $397,000. Cralic's overhead applied using the standard rate was $390,000. The controllable overhead variance is, therefore, Option A) $7,000.