Question

# The following information relating to a company's overhead costs is available. Budgeted fixed overhead rate per...

The following information relating to a company's overhead costs is available.

 Budgeted fixed overhead rate per machine hour \$ 0.50 Actual variable overhead \$ 73,000 Budgeted variable overhead rate per machine hour \$ 2.50 Actual fixed overhead \$ 17,000 Budgeted hours allowed for actual output achieved 32,000

Based on this information, the total overhead variance is:

Multiple Choice

• \$6,000 favorable.

• \$1,000 favorable.

• \$7,000 favorable.

• \$6,000 unfavorable.

• \$1,000 unfavorable.

Ans:

Option \$6,000 favourable. Is Correct Answer

Explanation:

= 7000 favourable +1000 unfavorable=\$6000 favorable

=Budgeted machine hours allowed for actual output*Budgeted variable overhead rate per machine hour - Actual total variable overhead

=32,000*\$2.50-\$73,000=\$7,000 favourable.

=Budgeted machine hours allowed for actual output*Budgeted Fixed overhead rate per machine hour - Actual Fixed overhead

=32000*.50-17000=16000-17000=1000 unfavorable.,,

Please comment in case of Issue.,,,

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