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

Factory Overhead Cost Variances

The following data relate to factory overhead cost for the production of 4,000 computers:

Actual: Variable factory overhead $65,000
Fixed factory overhead 25,500
Standard: 4,000 hrs. at $21 84,000

If productive capacity of 100% was 6,000 hours and the total factory overhead cost budgeted at the level of 4,000 standard hours was $92,500, determine the variable factory overhead controllable variance, fixed factory overhead volume variance, and total factory overhead cost variance. The fixed factory overhead rate was $4.25 per hour. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Variance Amount Favorable/Unfavorable
Variable factory overhead controllable variance $ Favorable
Fixed factory overhead volume variance Unfavorable
Total factory overhead cost variance $ Unfavorable

Homework Answers

Answer #1

1) Variable factory overhead controllable variance

= Actual variable factory overhead - Standard variable factory overhead

=Standard variable factory overhead = Total Budgeted factory overhead - Total Fixed factory Overhead

=65000 - 92500(6000 hours x 4.25)

= (2000) Favourable

2) Fixed factory overhead volume variance

= Budgeted fixed overhead (BFO)- Apllied fixed overheads (AFO)

BFO= Budgeted hours x standard rate = 6000 x 4.25 = 25500

AFO= Standard lab hours for actual production x standard rate =4000 x 4.25= 17000

=25500-17000

=8500 Unfavourable

3) Total factory overhead cost variance

= contol variancree + volume variancr

=(2000)+8500

=6500 unfavourable

Altrnatively

=Total actual factory overhead -standard factory overhead

TAFOH=Variale OH + Fixed OH =65000+25500=90500

SFOH=4000 hours x21 =84000

=90500-84000= 6500 unfavourable

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