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Factory Overhead Variance Corrections The data related to Shunda Enterprises Inc.’s factory overhead cost for the...

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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