Factory Overhead Cost Variances The following data relate to factory overhead cost for the production of...

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Factory Overhead Cost Variances The following data relate to factory overhead cost for the production of 7,000 computers: Act

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Answer 1

Answer #1

(1)

variable factory overhead controllable variance = actual variable factory overhead - budgeted variable factory overhead

= $198600 - {7000 x ($35 - $5.75)}

= $198600 - $204750

= -$6150 Favorable

Note: don’t forget to put a minus sign before the favorable variance

(2)

Fixed factory overhead volume variance = fixed factory overhead rate x (Standard hours for 100% of normal capacity - Standard hours for actual units produced)

= $5.75 x (11000 - 7000)

= $23000 Unfavorable

(3)

Total factory overhead cost variance = -$6150 Favorable + $23000 Unfavorable

= $16850 Unfavorable

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Answer 2

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