Fixed factory overhead 95,200 Standard: 46,000 hrs. at $5.00 ($2.90 for variable factory overhead) 230,000 Productive capacity at 100% of normal was 45,000 hours, and the factory overhead cost budgeted at the level of 46,000 standard hours was $228,600. Based on these data, the chief cost accountant prepared the following variance analysis: Variable factory overhead controllable variance: Actual variable factory overhead cost incurred $132,100 Budgeted variable factory overhead for 46,000 hours 133,400 Variance-favorable $(1,300) Fixed factory overhead volume variance: Normal productive capacity at 100% 45,000 hrs. Standard for amount produced 46,000 Productive capacity not used 1,000 hrs. Standard variable factory overhead rate x $5.00 Variance-unfavorable 5,000 Total factory overhead cost variance-unfavorable $3,700 Compute the following to assist you in identifying the errors in the factory overhead cost variance analysis. 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. Variance Amount Favorable/Unfavorable Variable Factory Overhead Controllable Variance 1300 x Fixed Factory Overhead Volume Variance Total Factory Overhead Cost Variance
Fixed factory overhead 95,200 Standard: 46,000 hrs. at $5.00 ($2.90 for variable factory overhead) 230,000 Productive capacity at 100% of normal was 45,000 hours, and the factory overhead cost budgeted at the level of 46,000 standard hours was $228,600. Based on these data, the chief cost accountant prepared the following variance analysis: Variable factory overhead controllable variance: Actual variable factory overhead cost incurred $132,100 Budgeted variable factory overhead for 46,000 hours 133,400 Variance-favorable $(1,300) Fixed factory overhead volume variance: Normal productive capacity at 100% 45,000 hrs. Standard for amount produced 46,000 Productive capacity not used 1,000 hrs. Standard variable factory overhead rate x $5.00 Variance-unfavorable 5,000 Total factory overhead cost variance-unfavorable $3,700 Compute the following to assist you in identifying the errors in the factory overhead cost variance analysis. 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. Variance Amount Favorable/Unfavorable Variable Factory Overhead Controllable Variance 1300 x Fixed Factory Overhead Volume Variance Total Factory Overhead Cost Variance
Chapter1: Financial Statements And Business Decisions
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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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Transcribed Image Text:Fixed factory overhead
95,200
Standard:
46,000 hrs. at $5.00 ($2.90 for variable factory overhead)
230,000
Productive capacity at 100% of normal was 45,000 hours, and the factory overhead cost budgeted at the level of 46,000 standard hours was
$228,600. Based on these data, the chief cost accountant prepared the following variance analysis:
Variable factory overhead controllable variance:
Actual variable factory overhead cost incurred
$132,100
Budgeted variable factory overhead for 46,000 hours
133,400
Variance-favorable
$(1,300)
Fixed factory overhead volume variance:
Normal productive capacity at 100%
45,000 hrs.
Standard for amount produced
46,000
Productive capacity not used
1,000 hrs.
Standard variable factory overhead rate
x $5.00
Variance-unfavorable
5,000
Total factory overhead cost variance-unfavorable
$3,700
Compute the following to assist you in identifying the errors in the factory overhead cost variance analysis. 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.
Variance
Amount
Favorable/Unfavorable
Variable Factory Overhead Controllable Variance
1300 x
Fixed Factory Overhead Volume Variance
Total Factory Overhead Cost Variance
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