Factory Overhead Variance Corrections
The data related to Shunda Enterprises Inc.’s factory overhead cost for the production of 20,000 units of product are as follows:
Actual: | Variable factory overhead | $68,300 |
Fixed factory overhead | 49,700 | |
Standard: | 30,000 hrs. at $4 ($2.30 for variable factory overhead) | 120,000 |
Productive capacity at 100% of normal was 28,900 hours, and the factory overhead cost budgeted at the level of 30,000 standard hours was $119,300. Based on these data, the chief cost accountant prepared the following variance analysis:
Variable factory overhead controllable variance: | |||
Actual variable factory overhead cost incurred | $68,300 | ||
Budgeted variable factory overhead for 30,000 hours | (69,000) | ||
Variance—favorable | $(700) | ||
Fixed factory overhead volume variance: | |||
Normal productive capacity at 100% | 28,900 | hrs. | |
Standard for amount produced | (30,000) | ||
Productive capacity not used | 1,100 | hrs. | |
Standard variable factory overhead rate | x $4 | ||
Variance—unfavorable | 4,400 | ||
Total factory overhead cost variance—unfavorable | $3,700 |
Compute the following to assist you in identifying the errors in the factory overhead cost variance analysis. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Round your interim computations to the nearest cent, if required.
Variance | Amount | Favorable/Unfavorable |
Variable Factory Overhead Controllable Variance | $fill in the blank 1 | |
Fixed Factory Overhead Volume Variance | $fill in the blank 3 | |
Total Factory Overhead Cost Variance | $fill in the blank 5 |
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