Factory Overhead Cost Variances Blumen Textiles Corporation began April with a budget for 40,000 hours of production in the Weaving Department. The department has a full capacity of 53,000 hours under normal business conditions. The budgeted overhead at the planned volumes at the beginning of April was as follows: Variable overhead $100,000 Fixed overhead 68,900 Total $168,900 The actual factory overhead was $170,900 for April. The actual fixed factory overhead was as budgeted. During April, the Weaving Department had standard hours at actual production volume of 42,000 hours. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Round your interim computations to the nearest cent, if required. a. Determine the variable factory overhead controllable variance. b. Determine the variable factory overhead volume variance.
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.
Blumen Textiles Corporation began April with a budget for 40,000 hours of production in the Weaving Department. The department has a full capacity of 53,000 hours under normal business conditions. The budgeted overhead at the planned volumes at the beginning of April was as follows:
| Variable overhead | $100,000 |
| Fixed overhead | 68,900 |
| Total | $168,900 |
The actual factory overhead was $170,900 for April. The actual fixed factory overhead was as budgeted. During April, the Weaving Department had standard hours at actual production volume of 42,000 hours. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Round your interim computations to the nearest cent, if required.
a. Determine the variable factory overhead controllable variance.
b. Determine the variable factory overhead volume variance.
Answer:-
Variable overhead meaning:- The varying production costs that come with running a firm are generally referred to as variable overhead. Variable overhead costs likewise change in proportion to changes in production in output.
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