Jx A 1 Problem 3: Overhead Costs Variances B C D E G 2 3 Jailene Inc. has provided the following information: 4 5 Standard Factory overhead rate (FOH) 6 of which Variable FOH 7 and Fixed FOH $10.00 per DLH $8.00 per DLH 8 Normal capacity at 100% is: 9 $2.00 per DLH 30,000 DLH 10 The standard cost and the actual cost of factory overhead for the production of 5,000 units during May were as follows: 11 Standard hours at 100% of normal capacity 12 Standard hours for actual production 13 Standard total FOH cost (25,000 hours $10 per hour) 14 Actual Variable FOH costs 15 Actual Fixed FOH costs 16 17- Required: 18 A. Calculate Variable FOH Controllable variance. 19 B. Calculate Fixed FOH Volume variance. 20 C. Calculate the total FOH variance. 21 22 Solution: 23 A. Variable FOH Controllable variance: 24 Actual Variable FOH costs 25 Budgeted Variable FOH costs 26 Variable FOH Controllable variance 27 28 29 B. Fixed FOH Volume variance 30,000 25,000 $250,000 STES $202,500 $60,000 30 31 32 C. Total FOH cost variance 33 34 35 Alternatively, 36 Total FOH variance Actual FOH-Applied FOH 37 38 39 40 41 42 43 44 45 46 Problem1 Problem2 Problem3 Problem4 Problem 5 F V C B Fi Ac S H T J K M N 0 P 0 R S ollows: Formulae: Variable FOH Controllable variance = Actual Variable FOH costs - Budgeted Variable FOH costs Budgeted Variable FOH costs = Standard Variable FOH rate x Standard hours for Actual Production Fixed FOH Volume Variance = (Standard hours at 100% of normal capacity - Standard hours for Actual production) x Standard Fixed FOH Rate