Question

The standard costs and actual costs for factory overhead for the manufacture of 3,000 units of actual production are as follows: Standard Costs Fixed overhead (based on 10,000 hours) 3 hours per unit @ $0.70 per hour Variable overhead 3 hours per unit @ $2.01 per hour Actual Costs Total variable cost, $18,000 Total fixed cost, $7,900 The total factory overhead cost variance is

a.$-90 unfavorable

b.$610 unfavorable

c.$1,310 favorable

d.$610 favorable

Answer 1

Answer:

Variable overhead controllable variance = ($18000- [3,000 units * 3 hours * $2.01per])

Variable overhead controllable variance = ($18000- $18090)

Variable overhead controllable variance = $90 Favorable

Fixed overhead volume variance = (10,000 hours - [3,000 units * 3 hours per unit] * $0.70 per hour)

Fixed overhead volume variance = (10,000 hours - 9,000 hours) * $0.70 per hour

Fixed overhead volume variance = 1,000 hours * $0.70 per hour

Fixed overhead volume variance = $700 Unfavorable

Total factory overhead cost variance = $90 Favorable + $700 Unfavorable

Total factory overhead cost variance = $610 Unfavorable

Therefore, the correct answer is b) $610 Unfavorable.