Question

The standard costs and actual costs for factory overhead for the manufacture of 2,500 units of actual production are as follows: Standard Costs Fixed overhead (based on 10,000 hours) 3 hours per unit at $0.76 per hour Variable overhead 3 hours per unit at $1.91 per hour Actual Costs Total variable cost, $18,200 Total fixed cost, $8,100 The variable factory overhead controllable variance is

Answer 1

($3,900) unfavorable

Step-by-step explanation:

The variable overhead controllable variance is computed as;

= Actual hours × ( Standard rate per hour - Actual rate per hour)

Actual hours = 2,500 units × 3

= 7,500

Standard rate per hour = $1.91 per hour

Actual rate per hour = Total variable cost / Actual hours

= 7,500 × ($1.91 - $18,200 / 7,500)

= 7,500 × ($1.91 - $2.43)

= 7,500 × - $0.52

= ($3,900) unfavorable