Sigorny Company uses standard costing and applies overhead on the basis of units produced. The company provided the following for July: $$\begin{array} { l r }
\text { Predetermined overhead rate per unit produced } & \$ 6.20 \
\text { Budgeted fixed overhead } & \$ 12,600 \
\text { Variable overhead budgeted per unit } & \$ 2.00 \
\text { Actual units produced } & 3,100
\end{array}$$ If the controllable overhead variance was $920 favorable in July, how much were total actual overhead costs?

Question

Sigorny Company uses standard costing and applies overhead on the basis of units produced. The company provided the following for July: $$\begin{array} { l r } 
\text { Predetermined overhead rate per unit produced } & \$ 6.20 \
\text { Budgeted fixed overhead } & \$ 12,600 \
\text { Variable overhead budgeted per unit } & \$ 2.00 \
\text { Actual units produced } & 3,100
\end{array}$$ If the controllable overhead variance was $920 favorable in July, how much were total actual overhead costs?

Quizplus · Accepted Answer

The total standard overhead cost for 3,100 units is $19,220 (3,100 units x $6.20). The controllable variance is $920 favorable, meaning actual overhead costs were $920 less than the standard overhead costs. Therefore, the actual overhead costs were $19,220 - $920 = $18,300.

Sigorny Company Uses Standard Costing and Applies Overhead on the Basis