Determine the (a) volume variance, (b) controllable variance, and (c) total factory overhead cost variance. a. Volume variance $fill in the blank 1 b. Controllable variance $fill in the blank 2 c. Total factory overhead cost variance $fill in the blank 3
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.
The standard factory
| Actual: Variable factory overhead | $350,500 |
| Fixed factory overhead | 84,000 |
| Standard: 35,000 hours @ $12 | 420,000 |
Determine the (a) volume variance, (b) controllable variance, and (c) total factory overhead cost variance.
| a. Volume variance | $fill in the blank 1 |
| b. Controllable variance | $fill in the blank 2 |
| c. Total factory overhead cost variance | $fill in the blank 3 |
Solution:-
Given,
The standard factory overhead rate = $12 per machine hour
(10 for variable factory overhead and 2 for fixed factory overhead)
100% capacity machine hours = 42,000
production units = 2,000
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