Total Overhead Variance The total overhead variance is the indifference between the projected overhead balances and the actual overheads incurred during the production process. It includes both, fixed and variable aspects of the production and tends to reveal the overall variance in terms of the deviations between the standardized expenses that were budgeted and the actually incurred at paves way for the management to take corrective measures for the same. Controllable Overhead Variance: The controllable overhead variance is the deviation of budgeted overhead of standard number of units from the actual expenses incurred popularly within the factory overheads. Also, controllable overhead variance is confined to factory overheads irrespective of any in the volume. Through this the unexpected costs may be minimized by keeping the track record of expenses and comparing them with the standard ones. Total overhead variance and controllable overhead variance for the period and classify them as favorable and unfavorable.

Question

Palladium, Incorporated recently lost a portion of its records in an office fire. The following information was salvaged from the accounting records. Cost of Goods Sold $ 67,000 Work-in-Process Inventory, Beginning 11,300 Work-in-Process Inventory, Ending 9,400 Selling and Administrative Expense 16,000 Finished Goods Inventory, Ending 16,100 Finished Goods Inventory, Beginning ?question mark Direct Materials Used ?question mark Factory Overhead Applied 12,400 Operating Income 14,220 Direct Materials Inventory, Beginning 11,180 Direct Materials Inventory, Ending 6,140 Cost of Goods Manufactured 61,880 Direct labor cost incurred during the period amounted to 1.5 times the factory overhead. The Chief Financial Officer of Palladium, Incorporated has asked you to recalculate the following accounts and to report to him by the end of the day. What is the amount in the finished goods inventory at the beginning of the year?

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Chapter 21, Problem 14QS

To determine

Total Overhead Variance

The total overhead variance is the indifference between the projected overhead balances and the actual overheads incurred during the production process. It includes both, fixed and variable aspects of the production and tends to reveal the overall variance in terms of the deviations between the standardized expenses that were budgeted and the actually incurred at paves way for the management to take corrective measures for the same.

Controllable Overhead Variance:

The controllable overhead variance is the deviation of budgeted overhead of standard number of units from the actual expenses incurred popularly within the factory overheads. Also, controllable overhead variance is confined to factory overheads irrespective of any in the volume. Through this the unexpected costs may be minimized by keeping the track record of expenses and comparing them with the standard ones.

Total overhead variance and controllable overhead variance for the period and classify them as favorable and unfavorable.

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