Question

Budgeted overhead for Waterway Industries at normal capacity of 32000 direct labor hours is $6 per hour variable and $4 per hour fixed. In May, $321600 of overhead was incurred in working 33500 hours when 34000 standard hours were allowed. The overhead controllable variance is

Answer 1

$10,400 Favorable

Explanation:

The computation of overhead controllable variance is shown below:-

Overhead controllable variance is

= Standard overhead - Actual

= ((34,000 × $6) + (32,000 × $4)) - $321,600

= ($204,000 + $128,000) - $321,600

= $332,000 - $321,600

= $10,400 Favorable

Therefore for computing the overhead controllable variance we simply applied the above formula.