Question
World Company expects to operate at 80% of its productive capacity of 55,000 units per month. At this planned level, the company expects to use
World Company expects to operate at 80% of its productive capacity of 55,000 units per month. At this planned level, the company expects to use 27,500 standard hours of direct labor. Overhead is allocated to products using a predetermined standard rate of 0.625 direct labor hours per unit. At the 80% capacity level, the total budgeted cost includes $66,000 fixed overhead cost and $313,500 variable overhead cost. In the current month, the company incurred $360,000 actual overhead and 24,500 actual labor hours while producing 39,000 units. (1) Compute the overhead volume variance. (2) Compute the overhead controllable variance.
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