Question

A. Use this information to answer the question that follow. The standard costs and actual costs for factory overhead for the manufacture of 2,800 units of actual production are as follows: Standard Costs Fixed overhead based on 10,000 hours) 3 hours per unit @ $0.77 per hour Variable overhead 3 hours per unit @ $1.92 per hour Actual Costs Total variable cost, $18,000 Total fixed cost, $8,200 The total factory overhead cost variance is? Choose the correct answer below $3,104 unfavorable $1,872 unfavorable $4,336 favorable $3,104 favorable

Answer 1

Answer: A) Caculation of Total Factory Overhead Variance Total Factory OH variance = Actual Cost - Standard Cost Standard cost Fixed cost = 2800 *3 *$ 0.77 = $6468 Variable = 2800 * 3 *$ 1.92 = $ 16128 Standard OH cost = $ 22 596 Actuals Variable Cost = $ 18000 Fixed Cost = $ 8200 Total Actual = $26200 Factory Overhead Cost variance = $ 3104 Unfavarable The Option "A" is correct B) Caculation of variable Factory Overhead Controllable Variance Standard Variable Cost = 2700 * 3 *1.91 = $15,471 Actual Variable Cost = $ 17900 variable Factory Overhead Controllable Variance = $ 15471 - $ 17900 variable Factory Overhead Controllable Variance = $2429 Unfavorable The Option "A" is correct C) Return on Investment Return on investment = Net Income / Invested Assets Return on investment = $ 219000/$1088000 Return on investment=20.1% The Option "A" is correct D) Profit margin Profit Margin = Profit/Turnover Profit Margin = $223000 / $1291000 Profit Margin = 17.3% The Option "B" is correct E) Investment Turnover Investment Turnover = Turnover / Investment Investment Turnover = $ 1258000 /$1081000 Investment Turnover = 1.16 The Option "D" is correct F) Caculation of Residual income Expected Income = $ 1194000 *13% = $ 155220 Actual Income = $ 242000 Residual Income = $ 86780 The Option "D" is correct