1: Calculate the fixed factory overhead volume variance and state why it is favorable or unfavorable. 2: Calculate the variable factory overhead controllable variance and state why it is favorable or unfavorable. 3: Calculate the total factory overhead variance. Use this information to answer the next few questions:We know the following information for Gummy Bears Inc:Total Units of Product Produced:40,000Standard Costs120,000 lbs @ $3.20 per lb.12,000 lbs @ $24.40 per hr.Actual Costs115,500 lbs @ $3.25 per lb11,700 lbs @ $25.00 per hrDirect MaterialsDirect LaborFactory OH100% of Capacity: 15,000 hoursVariable Rate: $8.00 / hour$91,200 Variable CostFixed Rate: $10.00 / hours$150,000 Fixed CostEach unit we produce requires 0.3 hour of direct labor

Name: 1: Calculate the fixed factory overhead volume variance and state why
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Description: 1: Calculate the fixed factory overhead volume variance and state why it is favorable or unfavorable. 2: Calculate the variable factory overhead controllable variance and state why it is favorable or unfavorable. 3: Calculate the total factory overhe

Fixed factory overhead volume variance = Applied Fixed Overhead – Budgeted Fixed Overhead Applied Fixed Overhead = Overhead Application Rate × Standard Input Qty. Allowed for Actual Production Overhead application rate = Budgeted Fixed Overhead/Budgeted UnitsA. 1 Overhead application rate = (15000*10)/(15000/0.3) = 3 Applied Fixed Overhead = 3*40000 = 120000 Fixed factory overhead volume variance = 120000-150000 = -30000 Unfavourable The fixed factory overhead volume variance is unfavourable because it incurs same amount of factory OH for 40000 units as it would have incurred for 50000 units. A. 2 Overhead application rate = (15000*8)]/50000 = 2 Applied variable Overhead = 40000*2 = 80000 Variable factory overhead controllable variance = 80000 - 91200 = -11200 Unfavourable Variable factory overhead controllable variance is unfavourable because the amount of variable OH variance for the production level of 40000 units is more than it should be.Total factory OH variance = Fixed factory OH variance + Variable factory overhead controllable variance =30000 +11200 = 41200 Unfavorable

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Calculate the fixed factory overhead volume variance and state why it is favorable or unfavorable. 2: Calculate the variable factory overhead controllable variance and state why it is favorable or unfavorable. 3: Calculate the total factory overhead variance.

Calculate the fixed factory overhead volume variance and state why it is favorable or unfavorable. 2: Calculate the variable factory overhead controllable variance and state why it is favorable or unfavorable. 3: Calculate the total factory overhead variance.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Variance Analysis

In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.

Standard Costing

The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.

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1: Calculate the fixed factory overhead volume variance and state why it is favorable or unfavorable. 2: Calculate the variable factory overhead controllable variance and state why it is favorable or unfavorable. 3: Calculate the total factory overhead variance.

Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.

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