Factory overhead variance corrections OBJ. 4 The data related to Shunda Enterprises Inc.s factory overhead cost for
Question:
Factory overhead variance corrections OBJ. 4 The data related to Shunda Enterprises Inc.’s factory overhead cost for the production of 100,000 units of product are as follows:
Actual: Variable factory overhead $458,000 Fixed factory overhead 494,000 Standard: 132,000 hrs. at $7.30 ($3.50 for variable factory overhead) 963,600 Productive capacity at 100% of normal was 130,000 hours, and the factory overhead cost budgeted at the level of 132,000 standard hours was $956,000. Based on these data, the chief cost accountant prepared the following variance analysis:
Variable factory overhead controllable variance:
Actual variable factory overhead cost incurred $458,000 Budgeted variable factory overhead for 132,000 hours 462,000 Variance—favorable –$ 4,000 Fixed factory overhead volume variance:
Normal productive capacity at 100% 130,000 hrs.
Standard for amount produced 132,000 Productive capacity not used 2,000 hrs.
Standard variable factory overhead rate × $7.30 Variance—unfavorable 14,600 Total factory overhead cost variance—unfavorable $10,600 Identify the errors in the factory overhead cost variance analysis.
Step by Step Answer:
Financial And Managerial Accounting
ISBN: 9781305267831,9781305267848
13th Edition
Authors: Carl S. Warren , James M. Reeve , Jonathan Duchac