Question

The following data relate to factory overhead cost for the production of 6,000 computers: Actual: Variable factory overhead $97,500 Fixed factory overhead 42,500 Standard: 6,000 hrs. at $21 126,000 If productive capacity of 100% was 10,000 hours and the total factory overhead cost budgeted at the level of 6,000 standard hours was $143,000, determine the variable factory overhead controllable variance, fixed factory overhead volume variance, and total factory overhead cost variance. The fixed factory overhead rate was $4.25 per hour. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Variance Amount favorable/Unfavorable Variable factory overhead controllable variance $ Fixed factory overhead volume variance Total factory overhead cost variance

Answer 1

Ans:

Determine Variable Factory Overhead Controllable Variance

Variable Factor Overhead Controllable Variance=(Budgeted Factory Variable Overhead- Actual Factory Variable Overhead)

= ($100500**-$97500)= $3000 favourable

**($143000-$42500)=$100500

Determine Fixed Factory Overhead Controllable Variance

Fixed Factory Overhead Volume Variance=(Standard Hours for Actual unit Produced- Standard Hour for normal Capacity) Fixed Factory Overhead)

=(6000-10000)X $4.25=$17000 Unfavourable

Determine Factory Overhead Cost Variance
Particular	Amount
Variable Factory Overhead Controllable Variance	$3000 (F)
Fixed Factory Overhead Volume Variance	$17000 (UF)
Factory Overhead Cost Variance	$14000 (UF)

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