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2 January, 06:18

Standard Actual Variable overhead rate $3.35 Fixed overhead 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 unfavorable b.$8,981.75 favorable c.$4,866.75 favorable d.$8,981.75 unfavorable

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  1. 2 January, 08:39
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    d.$8,981.75 unfavorable

    Explanation:

    The computation of the total factory overhead cost variance is shown below:

    As we know that

    Total Factory overhead cost variance = fixed overhead cost variance + variable overhead cost variance

    where,

    Fixed overhead cost variance is = Standard fixed overhead - actual fixed overhead

    Standard fixed overhead = $1.8 hours * 17,955 hours = $32,319

    And, the actual fixed overhead = $101,450 - $67,430 = $34,020

    So, the Variance is 1,701 unfavorable

    And,

    For variable overhead cost variance, it is

    = Standard variable overhead - actual variable overhead

    The standard variable overhead is = $3.35 * 17,955 hours = $60,149.25

    And,

    Actual variable overhead = $67,430

    So,

    Variance = 7,280.75 unfavorable

    Therefore,

    The total factory overhead cost variance is

    = $1,701 + $7,280.75

    = $8,981.75 unfavorable
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