Question

Bluecap Co. uses a standard cost system and flexible budgets for control purposes. The following budgeted information pertains to 2019:

Denominator volume—number of units		7,000
Denominator volume—percent of capacity		70	%
Denominator volume—standard direct labor hours (DLHs)		35,000
Budgeted variable factory overhead cost at denominator volume	$	102,700
Total standard factory overhead rate per DLH	$	15.10

During 2019, Bluecap worked 44,000 DLHs and manufactured 9,000 units. The actual factory overhead cost for the year was $15,000 greater than the flexible budget amount for the units produced, of which $5,000 was due to fixed factory overhead. In preparing a budget for 2020 Bluecap decided to raise the level of operation to 90% of capacity (a level it considers to be "practical capacity"), to manufacture 8,400 units at a budgeted total of 25,200 DLHs.

The total factory overhead spending variance in 2019 (to the nearest whole dollar), based on a three-variance breakdown (decomposition) of the total overhead variance for Bluecap Co., was: (Round your intermediate calculation to 2 decimal places.)

Multiple Choice

• $3,690 favorable.

• $11,930 unfavorable.

• $15,530 favorable.

• $17,770 favorable.

• $17,930 unfavorable.

Answer 1

ANSWER

Variable overhear efficiency variance=(actual DLHs - Allowed DLHs)8(standard variable overhead rate/DLH)

=(44,000 -(9,000 (35,000/7,000))*(102,700/35,000)

=(44,000-45,000)*2.9343

=2,930  Favorable

Total Flexible budgets variance=Total overhead spending variance + Variable overhead efficiency variance

   $15,000 U=Total overhead spending variance + 2,930  F

Total overhead spending variance = $15,000+ 2,930  F

=$17,930 Unfavorable

_____________________________________________

If you have any query or any Explanation please ask me in the comment box, i am here to helps you.please give me positive rating.

*****************THANK YOU**************