Eminem, Inc. manufactures music CDs. At the start of 2021, Eminem planned to produce 110,000 CDs for which the standard cost for each CD is: Plastic (0.25 pounds at $6.00 per pound) $1.50 Labor (0.10 hour at $12.00 per hour) 1.20 Overhead ($0.70 fixed and $0.90 variable) 1.60 Total $4.30 Overhead is allocated based on the number of units produced.
Eminem, Inc. manufactures music CDs. At the start of 2021, Eminem planned to produce 110,000 CDs for which the
|
Plastic (0.25 pounds at $6.00 per pound) |
$1.50 |
|
Labor (0.10 hour at $12.00 per hour) |
1.20 |
|
|
1.60 |
|
Total |
$4.30 |
Overhead is allocated based on the number of units produced. Eminem isolates material purchase variances at the point of purchase. The following information summarizes Eminem’s results for 2021:
|
Actual production |
112,000 CDs |
|
Actual variable overhead |
$91,000 |
|
Actual fixed overhead |
$85,500 |
How much is the controllable overhead variance for 2021?
|
$4,400 favorable |
||
|
$1,300 favorable |
||
|
$1,600 favorable |
||
|
$5,000 favorable |
||
|
$1,800 favorable |
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