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Exercise 21-20 Computation of volume and controllable
Refer to the information from Exercise 21-19.Compute the (1) overhead volume variance and (2) overhead controllable variance and classify each as favorable or unfavorable.
Check (2) $14,375U
Exercise 21-19 Computation of total overhead rate and total overhead variance P3
World Company expects to operate at 80% of its productive capacity of 50,000 units per month. At this planned level, the company expects to use 25,000 standard hours of direct labor. Overhead is allocated to products using a predetermined standard rate of 0.625 direct labor hours per unit. At the 80% capacity level, the total budgeted cost includes $50,000 fixed overhead cost and $275,000 variable overhead cost. In the current month, the company incurred $305,000 actual overhead and 22,000 actual labor hours while producing 35,000 units.
- Compute the predetermined standard overhead rate for total overhead.
- Compute and interpret the total overhead variance.
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