Question

shaw incorporated began this period with a budget for 1,000 units of predicted production. the budgeted overhead at this predicted activity follows. at period-end, total actual overhead was $92,000, and actual units produced were 900. the company applies overhead with a standard of 3 dlh per unit and a standard overhead rate of $30 per dlh. variable overhead $ 50,000 fixed overhead 40,000 total overhead $ 90,000 a. compute controllable variance. b. compute volume variance.

Answer 1

The controllable variance is $2,000 and the volume variance is -$117,000.

Step-by-step explanation:

The controllable variance can be computed by subtracting the budgeted overhead from the actual overhead. In this case, the controllable variance would be $92,000 - $90,000 = $2,000.

The volume variance can be computed by subtracting the budgeted overhead from the standard overhead. In this case, the volume variance would be $90,000 - ($30 * 900 * 3) = -$117,000.

Answer 2

If shaw incorporated began this period with a budget for 1,000 units of predicted production.

A. The controllable variance is $2,000.

B. The volume variance is -$3,000.

What is the Controllable variance?

a. Controllable variance:

Controllable variance = Actual overhead - Budgeted overhead

Controllable variance = $92,000 - $90,000

Controllable variance = $2,000

Therefore the controllable variance is $2,000.

b. Volume variance

Volume variance = (Actual units produced - Budgeted units) × Standard overhead rate

Volume variance = (900 - 1,000) × $30

Volume variance = (-100) × $30

Volume variance = -$3,000

Therefore the volume variance is -$3,000.