Question

World Company expects to operate at 80 % of its productive capacity of 55,000 units per month. At this planned level, the company expects to use 23,100 standard hours of direct labor. Overhead is allocated to products using a predetermined standard rate of 0.525 direct labor hours per unit At the 80% capacity level, the total budgeted cost includes $60.060 fixed overhead cost and $267,960 variable overhead cost. In the current month, the company incurred $342,000 actual overhead and 20100 actual labor hours while producing 41,000 units. (1) Compute the overhead volume variance (2) Compute the overhead controllable variance Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the overhead volume variance. Classify as favorable or unfavorable. (Round "OH costs per DL hour" to 2 decimal places.) Fixed Overhead Applied Fixed Overhead applied Volume Variance Volume variance Required 1 Required 2

Answer 1

Solutions:

17 18 19 20 21 22 23 24 world company 25 26 27 28 29 30 Fixed Overhead Applied Fixed Overhead Per DL hr ($60060/23100) $2.60 Standard DL Hours (41000 Units* 0.525) 21525 Fixed Overhead Applied (21525X2.60) $55,965 Volume variance Total Fixed Overhead Applied $55,965 Total Budgeted Fixed OH $60,060 Volume Variance $4,095 Unfavorable 31 33 34 35 36 37 39 40 Computation of Overhead Controllable Variance Total Actual Overhead $342,000 Flexible Budgeted Overhead: Variable ($267960/23100*21525) $249,690 Fixed $60,060 Total $309,750 Overhead Controllable Variance $32,250 Unfavorable 41 42 43 60 61 62 -817 (4) ) Sheet911 Sheet912 Sheet595 (5) Sheet914