Factory Overhead Variance Corrections The data related to Shunda Enterprises Inc.’s factory overhead cost for the production of 30,000 units of product are as follows: Actual: Variable factory overhead $132,100   Fixed factory overhead 95,200 Standard: 46,000 hrs. at $5 ($2.90 for variable factory overhead) 230,000   Productive capacity at 100% of normal was 45,200 hours, and the factory overhead cost budgeted at the level of 46,000 standard hours was $228,600. Based on these data, the chief cost accountant prepared the following variance analysis: Variable factory overhead controllable variance:       Actual variable factory overhead cost incurred $132,100      Budgeted variable factory overhead for 46,000 hours (133,400)      Variance—favorable     $(1,300) Fixed factory overhead volume variance:     Normal productive capacity at 100% 45,200  hrs.   Standard for amount produced (46,000)     Productive capacity not used 800  hrs.   Standard variable factory overhead rate x $5         Variance—unfavorable     4,000 Total factory overhead cost variance—unfavorable     $2,700 Compute the following to assist you in identifying the errors in the factory overhead cost variance analysis. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Round your interim computations to the nearest cent, if required. Variance Amount Favorable/Unfavorable Variable Factory Overhead Controllable Variance $fill in the blank 1   Fixed Factory Overhead Volume Variance $fill in the blank 3   Total Factory Overhead Cost Variance

Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter9: Evaluating Variances From Standard Costs
Section: Chapter Questions
Problem 15E: Factory overhead cost variances The following data relate to factory overhead cost for the...
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Factory Overhead Variance Corrections

The data related to Shunda Enterprises Inc.’s factory overhead cost for the production of 30,000 units of product are as follows:

Actual: Variable factory overhead $132,100
  Fixed factory overhead 95,200
Standard: 46,000 hrs. at $5 ($2.90 for variable factory overhead) 230,000

 

Productive capacity at 100% of normal was 45,200 hours, and the factory overhead cost budgeted at the level of 46,000 standard hours was $228,600. Based on these data, the chief cost accountant prepared the following variance analysis:

Variable factory overhead controllable variance:      
Actual variable factory overhead cost incurred $132,100     
Budgeted variable factory overhead for 46,000 hours (133,400)  
   Variance—favorable     $(1,300)
Fixed factory overhead volume variance:    
Normal productive capacity at 100% 45,200  hrs.  
Standard for amount produced (46,000)    
Productive capacity not used 800  hrs.  
Standard variable factory overhead rate x $5     
   Variance—unfavorable     4,000
Total factory overhead cost variance—unfavorable     $2,700

Compute the following to assist you in identifying the errors in the factory overhead cost variance analysis. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Round your interim computations to the nearest cent, if required.

Variance Amount Favorable/Unfavorable
Variable Factory Overhead Controllable Variance $fill in the blank 1  
Fixed Factory Overhead Volume Variance $fill in the blank 3  
Total Factory Overhead Cost Variance
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