Question

1. 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 @ $1.91 per hour
Actual Costs
Total variable cost, $18,100
Total fixed cost, $8,200

The amount of the variable factory overhead controllable variance is

a.$2,056 favorable

b.$0

c.$2,056 unfavorable

d.$1,645 favorable

Answer 1

Variable factory overhead controllable variance is: =

Actual overhead expense - (budgeted overhead per unit x standard number of units).

In the given questions standard variable overhead per unit for $1.91 and hours required = 3 hour pi.

Accordingly for 2800 units total standard hours = 2800 × 3 hours = 8400 hours @ $ 1.91..

Thus variable factory overhead controllable variance = Actual variable cost - ( std hours × std rate per hour).

Variance = $ 18100 - ( 8400 × 1.91) = 18100 - 16044.

Thus controllable variance = 2056 unfavorable as actual cost is more than budgeted coat

Hence the correct option is --​​​​​--C i.e $2056 unfavorable.