The Joyner Corporation originally budgeted for $360,000 of fixed overhead. Production was budgeted to be 12,000 units. The standard hours for production were 5 hours per unit. The variable overhead rate was $3 per hour. Actual fixed overhead was $360,000 and actual variable overhead was $170,000. Actual production was 11,700 units.
Compute the factory overhead controllable variance.
A. 9,000F
B. 9,000U
C. 5,500F
D. 5,500U
13 years ago
13 years ago
9000u
11 months ago
To compute the factory overhead controllable variance, we need to compare the actual variable overhead cost with the budgeted variable overhead cost.
First, calculate the budgeted variable overhead cost:
Budgeted variable overhead cost = Budgeted variable overhead rate x Actual production
= $3 x 11,700 units
Next, calculate the actual variable overhead cost:
Actual variable overhead cost = $170,000
Now, find the difference between the actual and budgeted variable overhead cost:
Factory overhead controllable variance = Actual variable overhead cost - Budgeted variable overhead cost
If the result is positive, it indicates a favorable variance (F), and if it's negative, it indicates an unfavorable variance (U).
Substituting the values into the equation:
Factory overhead controllable variance = $170,000 - ($3 x 11,700)
Calculating:
Factory overhead controllable variance = $170,000 - $35,100
Simplifying:
Factory overhead controllable variance = $134,900
Since the result is positive, the factory overhead controllable variance is $134,900F.
Therefore, the correct answer is not listed.