Question

Alvarez Company’s output for the current period yields a $22,000 favorable overhead volume variance and a $52,900 unfavorable overhead controllable variance. Standard overhead applied to production for the period is $226,000. QS 23-16 Overhead cost variances LO P4 What is the actual total overhead cost incurred for the period?

Answer 1

$256,900

Explanation:

The computation of actual total overhead cost is shown below:-

The Actual overhead cost incurred

= Standard overhead cost + Unfavorable overhead controllable variance - Favorable overhead volume variance

= $226,000 + $52,900 - $22,000

= $278,900 - $22,000

= $256,900

Therefore for computing the actual total overhead cost we simply applied the above formula.