Ask Question
10 September, 04:58

Factory Overhead Cost Variances Thomas Textiles Corporation began November with a budget for 40,000 hours of production in the Weaving Department. The department has a full capacity of 53,000 hours under normal business conditions. The budgeted overhead at the planned volumes at the beginning of November was as follows: Variable overhead $108,000 Fixed overhead 74,200 Total $182,200 The actual factory overhead was $184,400 for November. The actual fixed factory overhead was as budgeted. During November, the Weaving Department had standard hours at actual production volume of 42,000 hours. Determine the variable factory overhead controllable variance and the fixed factory overhead volume variance. 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.

+5
Answers (1)
  1. 10 September, 08:15
    0
    a. Variable factory overhead controllable variance: $3,200 F

    b. Fixed factory overhead volume variance: $3,710 F

    Explanation:

    a)

    Standard rate of variable overhead = (variable overhead) / (Production hours)

    Standard rate of variable overhead = $108,000 / 40000 = $2.70 per hour

    Standard hours for actual production = 42000 hours

    Budgeted variable overhead for actual production = (standard hours of production * standard rate of variable overhead)

    Budgeted variable overhead for actual production = 42000 * $2.70 = $113,400

    Actual factory overhead = $184,400

    Fixed overhead = $74,200

    Actual variable overhead incurred = (Actual factory overhead) - (Fixed overhead)

    Actual variable overhead incurred = $184,400 - $74,200 = $110,200

    Variable factory overhead controllable variance = Budgeted variable overhead for actual production - Actual variable overhead

    Variable factory overhead controllable variance = $113,400 - $110,200

    Variable factory overhead controllable variance = $3,200 F

    b)

    Budgeted fixed overhead = $74,200

    Predetermined fixed overhead rate = $74200 / 40000 = $1.855 per hour

    Fixed overhead applied = Standard hours for actual production * Overhead rate = 42000 * $1.855 = $77,910

    Fixed factory overhead volume variance = Fixed overhead applied - Budgeted fixed overhead

    = $77910 - $74200 = $3,710 F
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Factory Overhead Cost Variances Thomas Textiles Corporation began November with a budget for 40,000 hours of production in the Weaving ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers