Question

Factory Overhead Controllable Variance Bellingham Company produced 4,300 units of product that required 8.5 standard hours per unit. The standard variable overhead cost per unit is $6.00 per hour. The actual variable factory overhead was $210,970. Determine the variable factory overhead controllable variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. $ Favorable

Answer 1

Variable factory overhead controllable variance = $8330 Favourable

Explanation;

Variable factory overhead controllable variance =

Standard variable overhead cost – Actual variable overhead cost

Now, first of all let’s calculate standard variable overhead costs;

Standard variable overhead cost = Standard hours * Per hour rate

Standard hours (4300 * 8.5) = 36550

Standard per hour rate = $6

Hence, Standard variable overhead cost (36550 * $6) = $219300

Actual varaible overhead cost = $210970

Variable factory overhead controllable variance = $219300 – $210970

= $8330 Favourable