Calculating factory overhead: two variances LO_{4 ,5} Bernard 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?

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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