Budgeted number of units = 55000 × 80%
= 44000 units
Fixed overhead applied
60060/23100 = 2.6
Budgeted labour hours to produce 1 unit = 23100/44000= 0.525
= 41000 × 0.525 = 21525
1. Fixed overhead applied = 21525 × 2.6 = 55965
Normal capacity hours = 23100
Standard hours allowed for allowed production = 21525
1.Volume variance = ( 23100 - 21525 ) × 2.6 = 4095Unfavourable
Actual overhead incurred = 342000
Fixed expenses budgeted = 60060
Actual variable expenses = 281940
Variable expenses for standard hours allowed = 21525 × 11.6
= 249690
2. Controllable variance = 281940-249690=32250 unfavourable
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