Question

Factory Overhead Controllable Variance Bellingham Company produced 3,200 units of product that required 3 standard hours per unit. The standard variable overhead cost per unit is $2.10 per hour. The actual variable factory overhead was $20,540. Determine the variable factory overhead controllable variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

If both can be answered that would be great. I just have to see how to set up these problems so I can solve the others.

Answer 1

1) Actual units produced = 3200 units

Standard hours required per unit= 3 hours

Standard variable overhead cost per unit= $2.10 per hour

Actual variable factory overhead cost = $ 20,540

Factory overhead controllable variance= actual factory variable overhead cost - budgeted allowance based on standard hours allowed

= $20,540 - standard hours required for producing 3200 units × $ 2.10 per hour

= $20,540-( 3200×3 hours each)× 2.10

= $ 20,540-(9600 hours× $ 2.10 per hour)

=$ 20,540- $ 20,160

= $380(unfavourable)

2) Actual units produced = 5200 units

standard fixed overhead cost per unit = $ 2.85 per hour at 18700 hours

standard hours required per unit= 4 hours.

Actual time taken per unit = 18700 hours/ 5200 units produced

= 3.60 hours

Standard units to be produced in 18700 hours = 18700 /4 = 4675 units

Fixed Overhead Volume Variance = Applied Fixed Overhead – Budgeted Fixed Overhead

=> $2.85 × (4× 5200) - $2.85 × (18700 hours)

= (20800- 18700) × $2.85

= $5985(favourable)