Question

Bellingham Company produced 6,600 units of product that required 7 standard direct labor hours per unit. The standard variable overhead cost per unit is $2.60 per direct labor hour. The actual variable factory overhead was $116,040. 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

-$4,080 favorable

Step-by-step explanation:

The computation of the variable factory overhead controllable variance is shown below:

Standard labour overheads needed for actual output

= 6,600 units × 7 direct labor hours

= 46,200

Standard overhead cost = 2.60 × 46,200 hours

= $120,120

And, Actual overhead cost is $116,040

Now the Variance is

= standard overhead cost - actual overhead cost

= $120,120 - $116,040

= -$4,080 favorable