Blumen Textiles Corporation began April with a budget for 37,000 hours of production in the Weaving Department. The department has a full capacity of 49,000 hours under normal business conditions. The budgeted overhead at the planned volumes at the beginning of April was as follows:
Variable overhead | $118,400 |
Fixed overhead | 83,300 |
Total | $201,700 |
The actual factory overhead was $204,100 for April. The actual fixed factory overhead was as budgeted. During April, the Weaving Department had standard hours at actual production volume of 38,000 hours. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Round your interim computations to the nearest cent, if required.
a. Determine the variable factory overhead
controllable variance.
$
b. Determine the fixed factory overhead volume
variance.
$
(1)
Budgeted rate of variable overhead = $118400/37000 = $3.2 per hour
Standard variable overhead for actual production = 38000 x $3.2 = $121600
Variable factory overhead controllable variance = Standard variable overhead - Actual variable overhead
= $121600 - ($204100 - $83300) = 800 Favorable
(2)
Predetermined fixed overhead rate = $83300/49000 = $1.70 per hour
Fixed overhead applied = standard hours x standard rate
= 38000 x $1.70 = $64600
Fixed overhead volume variance = Fixed overhead applied - Budgeted fixed overhead
= $64600 - $83300 = $18700 Unfavorable
Blumen Textiles Corporation began April with a budget for 37,000 hours of production in the Weaving Department. The depa...
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