Question

The following data relate to factory overhead cost for the production of 15,000 computers:

Actual:	Variable factory overhead	$240,000
	Fixed factory overhead	160,000
Standard:	19,500 hrs. at $20	390,000

If productive capacity of 100% was 20,000 hours and the total factory overhead cost budgeted at the level of 19,500 standard hours was $394,000, determine the variable factory overhead controllable variance, fixed factory overhead volume variance, and total factory overhead cost variance. The fixed factory overhead rate was $8.00 per hour. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Variance	Amount	Favorable/Unfavorable
Controllable variance	$
Volume variance	$
Total factory overhead cost variance	$

Answer 1

Determine Variable Factory Overhead Controllable Variance

Variable Factor Overhead Controllable Variance=(Budgeted Factory Variable Overhead- Actual Factory Variable Overhead)

= ($234000**-$240000)= $6000 Unfavourable

**($394000-$160000)=$234000

Determine Fixed Factory Overhead Controllable Variance

Fixed Factory Overhead Volume Variance=(Standard Hours for Axctual unit Produced- Standard Hour for normal Capacity) Fixed FactoryOverhead)

=(19500-20000)X $8=$4000 Unfavourable

Determine Factory Overhead Cost Variance
Particular	Amount
Variable Factory Overhead Controllable Variance	$6000 (UF)
Fixed Factory Overhead Volume Variance	$4000(UF)
Factory Overhead Cost Variance	$10000(UF)