The standard overhead rate is $10 per direct labor hour ($8 for variable factory overhead and $2 fixed factory overhead) based on 100% capacity of 30,000 direct labor hours. The standard cost and the actual cost of factory overhead for the production of 5000 units during May were as follows: Standard: 25,000 hours @ $250,000 $10 Actual: Variable factory overhead 202,500 Fixed factory overhead 60,000 A) What is the amount of the factory overhead volume variance? B) What is the amount of the factory overhead controllable variance?
The standard overhead rate is $10 per direct labor hour ($8 for variable factory overhead and $2 fixed factory overhead) based on 100% capacity of 30,000 direct labor hours. The standard cost and the actual cost of factory overhead for the production of 5000 units during May were as follows: Standard: 25,000 hours @ $250,000 $10 Actual: Variable factory overhead 202,500 Fixed factory overhead 60,000 A) What is the amount of the factory overhead volume variance? B) What is the amount of the factory overhead controllable 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:The standard overhead rate is $10 per
direct labor hour ($8 for variable factory
overhead and $2 fixed factory overhead)
based on 100% capacity of 30,000 direct
labor hours. The standard cost and the
actual cost of factory overhead for the
production of 5000 units during May were
as follows:
Standard:
25,000 hours @
$250,000
$10
Actual: Variable factory overhead
202,500
Fixed factory overhead
60,000
A) What is the amount of the factory
overhead volume variance?
B) What is the amount of the factory
overhead controllable variance?
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