Question

Help World Company expects to operate at 80% of its productive capacity of 56,250 units per month. At this planned level, the company expects to use 22.500 standard hours of direct labor. Overhead is allocated to products using a predetermined standard rate of 0.500 direct labor hour per unit. At the 80% capacity level, the total budgeted cost includes $60,750 fixed overhead cost and $263.250 variable overhead cost. In the current month, the company incurred $338,000 actual overhead and 19,500 actual labor hours while producing 42,000 units. (1) Compute the overhead volume variance Classify each as favorable or unfavorable. (2) Compute the overhead controllable variance Classify each as favorable or unfavorable. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the overhead controllable variance Classify each as favorable or unfavorable. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance.) Total actual overhead Flere budget overhead Fred Variable Overhead controllable variance < Prev 3 of 10 ! Next > SOS. Q Search or enter address z XCVBN M

just need section 2 done

Answer 1

Solution 1:

Fixed Overhead Applied
Fixed Overhead Per DL hr ($60750/22500)	$2.70
Standard DL Hours (42000 Units* 0.500)	21000
Fixed Overhead Applied (21000* $2.70)	$56,700
Volume variance
Total Fixed Overhead Applied	$56,700
Total Budgeted Fixed OH	$60,750
Volume Variance	$4,050	Unfavorable

Solution 2;

Computation of Overhead Controllable Variance
Total Actual Overhead		$3,38,000
Flexible Budgeted Overhead:
Variable ($263250/22500*21000)	$2,45,700
Fixed	$60,750
Total		$3,06,450
Overhead Controllable Variance		$31,550	Unfavorable