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In: Accounting

Variable OH rate $3.35 Fixed OH rate $1.80 Hours 18,900 17,955* Fixed overhead $46,000 Actual variable...

Variable OH rate $3.35
Fixed OH rate $1.80
Hours 18,900 17,955*
Fixed overhead $46,000
Actual variable overhead $67,430
Total factory overhead $101,450


*Actual hours are equal to standard hours for units produced.

The total factory overhead cost variance is

a.$4,866.75 favorable

b.$8,981.75 favorable

c.$4,866.75 unfavorable

d.$8,981.75 unfavorable

Solutions

Expert Solution

Option D.Why D?

Variable Factory Overhead= Actual Variable Factory Overhead – Budgeted Variable Factory Overhead

                                       (A) = $67,430 – (17,955 hours × $3.35) = $7,280.75 Unfavorable Variance Fixed Factory Overhead Volume Variance = (Standard Hours NormalCapacity – SHfor Actual Units Produced) × Fixed Factory Rate

                                       (B) = (18,900 hours – 17,955 hours) × $1.80 = $1,701 Total factory overhead cost variance = Variable factory overhead variance + Fixed factory overhead volume variance

                                                    = $7,280.75 + $1,701 = $8,981.75 Unfavorable Variance

ekkarill92 answered 1 year ago
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