Manuel Company predicts it will operate at 80% of its productive capacity. Its overhead allocation base is DLH and its standard amount per allocation base is 0.5 DLH per unit. The company reports the following for this period. Flexible budget at 80% Capacity Actual Results Production (in units) 51,500 Overhead Variable overhead $283,250 Fixed overhead 51,500 Total overhead $334,750 46,400 $324,800 (1) Compute the overhead volume variance. Indicate variance as favorable or unfavorable. (2) Compute the overhead controllable variance. Indicate variance as favorable or unfavorable.

Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter8: Standard Cost Accounting—materials, Labor, And Factory Overhead
Section: Chapter Questions
Problem 20E: Calculating amount of factory overhead applied to work in process The overhead application rate for...
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Manuel Company predicts it will operate at 80% of its productive
capacity. Its overhead allocation base is DLH and its standard amount
per allocation base is 0.5 DLH per unit. The company reports the
following for this period.
Flexible budget at 80% Capacity Actual Results
Production (in units) 51,500
Overhead
Variable overhead
$283,250
Fixed overhead
51,500
Total overhead
$334,750
46,400
$324,800
(1) Compute the overhead volume variance. Indicate variance as
favorable or unfavorable.
(2) Compute the overhead controllable variance. Indicate variance as
favorable or unfavorable.
Transcribed Image Text:Manuel Company predicts it will operate at 80% of its productive capacity. Its overhead allocation base is DLH and its standard amount per allocation base is 0.5 DLH per unit. The company reports the following for this period. Flexible budget at 80% Capacity Actual Results Production (in units) 51,500 Overhead Variable overhead $283,250 Fixed overhead 51,500 Total overhead $334,750 46,400 $324,800 (1) Compute the overhead volume variance. Indicate variance as favorable or unfavorable. (2) Compute the overhead controllable variance. Indicate variance as favorable or unfavorable.
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