The standard costs and actual costs for factory overhead for the manufacture of 2,500 units of actual production are as follows: The amount of the variable factory overhead controllable variance is
A) $2,000 unfavorable
B) $3,000 favorable
C) $0
D) $3,000 unfavorable

Question

The standard costs and actual costs for factory overhead for the manufacture of 2,500 units of actual production are as follows:  The amount of the variable factory overhead controllable variance is
A) $2,000 unfavorable 
B) $3,000 favorable 
C) $0 
D) $3,000 unfavorable

Quizplus · Accepted Answer

Variable factory overhead controllable variance = Actual variable overhead - (Standard rate x Actual input)

Actual variable overhead = $39,000
Standard rate = $4 per unit
Actual input = 8,000 machine-hours / 2,500 units = 3.2 machine-hours per unit

Variable factory overhead controllable variance = $39,000 - ($4 per unit x 3.2 machine-hours per unit x 2,500 units) = $3,000 unfavorable.

The Standard Costs and Actual Costs for Factory Overhead for the Manufacture