If the $9 per hour overhead rate in Question 12 includes $5 variable, and actual overhead costs were $248,000, what is the overhead controllable variance for June? The normal capacity hours were 28,000. Is the variance favorable or unfavorable?
Do not need info from question 12 to answer this question as this is the only information I have, never had a question 12 with the assignment.
Overhead Fixed Cost= Overhead cost per hour-Variable overhead cost per hour
= $9- $5
= $4
Total Fixed Overhead cost = No of Hours * Overhead Fixed Cost per hour
= 28000hours * $ 4
= $112,000
Total variable overhead cost= Total overhead cost-Total Fixed overhead cost
= $248,000-$112,000
= $136,000
Variable overhead cost per hour = Total variable overhead cost/ No of hours
= $136,000/28000
= $4.85
overhead controllable variable= Variable overhead cost variance
Standard variable overhead cost= Total no of hours * Standard Cost
= $28000* $5
= $140,000
Variance= Standard Cost- Actual Cost
= $28000*5- $28000*4.85
= $4000
This is favourable for the company.
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