Question

Given the following information for Albright Company, what was the factory overhead cost variance?

Manufacturing Costs - Actual Costs - Standard Cost at Actual Volume - Budgeted Cost
Direct materials - $80,300 - $ 76,000 - $ 71,250
Direct labor - 77,000 - 72,500 - 68,400
Factory overhead - 44,800 - 48,000 - 45,600
Total - $202,100 - $196,500 - $185,250
a. $3,200 unfavorableb. $5,600 unfavorablec. $16,850 unfavorabled. $(5,600) favorable

Answer 1

The correct answer is option (b) unfavorable

Step-by-step explanation:

From the question given

We solve for the factory overhead cost variance to know whether it is favorable or unfavorable.

Solution

The Total cost variance for manufacturing = Standard Cost at Actual Volume - Actual costs

Thus,

= 196,500-202,100

= $5,600 unfavorable

Therefore the overhead cost of variance is = $5,600 which is unfavorable

Correct option is b.