Calculating factory overhead: two variances}

Carolina Manufacturing Company normally produces 10,000 units of product \(X\) each month. Each unit requires 2 hours of direct labor, and factory overhead is applied on a direct labor hour basis. Fixed costs and variable costs in factory overhead at the normal capacity are \(\$ 5\) and \(\$ 3\)

per unit, respectively. Cost and production data for May follow:

a. Calculate the controllable variance.

b. Calculate the volume variance.

c. Was the total factory overhead under- or overapplied? By what amount?

Transcribed Image Text:

Production for the month Direct labor hours used Factory overhead incurred for: Variable costs Fixed costs 9,000 units 18,500 hours $28,500 $52,000