Question

The following data relate to factory overhead cost for the production of 5,000 computers:

Actual:	Variable factory overhead	$141,900
	Fixed factory overhead	46,000
Standard:	5,000 hrs. at $35	175,000

If productive capacity of 100% was 8,000 hours and the total factory overhead cost budgeted at the level of 5,000 standard hours was $192,250, determine the variable factory overhead controllable variance, fixed factory overhead volume variance, and totalfactory overhead cost variance. The fixed factory overhead rate was $5.75 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

Variance Amount Fav./Unf.

Ans.	Variable factory overhead controllable variance		4350	Favorable
	Fixed factory overhead volume variance		17250	Unfavorable
	Total Factory overhead cost variance		12900	Unfavorable
	*Variable overhead variance = Budgeted variable overhead - Actual variable overhead
		[5000 * (35 - 5.75)] - 141900
		146250 - 141900
		4350
	*Fixed factory overhead variance   =   Budgeted fixed overhead - Actual fixed overhead
		(5000 * 5.75) - 46000
		28750 - 46000
		-17250
	*Total Factory overhead cost variance   =   Variable overhead variance + Fixed overhead variance
			4350 + (-17250)
			-12900