Question

Factory Overhead Cost Variances Blumen Textiles Corporation began April with a budget for 43,000 hours of production in the Weaving Department. The department has a full capacity of 57,000 hours under normal business conditions. The budgeted overhead at the planned volumes at the beginning of April was as follows: Variable overhead $146,200 Fixed overhead 102,600 Total $248,800 The actual factory overhead was $251,800 for April. The actual fixed factory overhead was as budgeted. During April, the Weaving Department had standard hours at actual production volume of 45,000 hours. Determine the variable factory overhead controllable variance and the fixed factory overhead volume variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Round your interim computations to the nearest cent, if required. a. Variable factory overhead controllable variance: $ b. Fixed factory overhead volume variance: $

Answer 1

a. Controllable Variance = 3,800 (Favorable)

b. Volume Variance = 21,600 (Unfavorable)

Step-by-step explanation:

a. Controllable Variance

Actual variable factory Overhead( 251,800 - 102,600) 149,200

Standard Variable factory Overhead at actual Production

Standard Hours at actual Production (A) 45,000

Variable Factory overhead Rate (B) 3.4

(146,200/ 43,000)

Standard variable factory Overhead (A*B) 153,000

Controllable Variance 3,800 F

b. Fixed factory Overhead volume variance

Volume variance:

Volume at 100% of normal capacity 57,000

Less: Standard hours 45,000

12,000

Fixed Overhead rate (B) (102,600/ 57,000) 1.8

Volume Variance (A*B) 21,600 (Unfavorable)