Asked by Kaitlynn McEwen on May 10, 2024
Verified
The variable factory overhead controllable variance is
A) $2,000 unfavorable
B) $3,000 favorable
C) $0
D) $3,000 unfavorable
Standard Costs
Pre-determined or estimated costs used as a benchmark to compare with the actual costs incurred.
Actual Costs
The real, total expenses incurred during the production or acquisition of goods and services.
Fixed Overhead
Fixed costs that do not vary with the level of production or sales over a short term, including rental expenses, salaries, and insurance.
- Understand and calculate factory overhead variances, including controllable, volume, and fixed/variable variances.
Verified Answer
VD
Victoria DonofrioMay 16, 2024
Final Answer :
D
Explanation :
The variable factory overhead controllable variance is calculated as the difference between the actual variable costs and the standard variable costs for the actual activity level. The standard variable cost for 2,500 units is calculated as 2,500 units * 3 hours/unit * $2.00/hour = $15,000. The actual variable cost is $18,000. Therefore, the variance is $18,000 (actual) - $15,000 (standard) = $3,000 unfavorable.
Learning Objectives
- Understand and calculate factory overhead variances, including controllable, volume, and fixed/variable variances.