Scotch Brand Products produces packaging tape and has determined the following to be its standard cost of producing one case of budget packaging tape: $$\begin{array} { l r }
\text { Material ( } 3.50 \text { ounces at } \$ 1.30 \text { per ounce) } & \$ 4.55 \
\text { Labor } ( 0.30 \text { hour at } \$ 12.00 \text { per hour) } & 3.60 \
\text { Overhead } & \underline { 2.20 } \
\text { Total } & \underline { \underline { \$ 10.35 } }
\end{array}$$ At the start of 2014, Scotch Brand planned to produce 80,000 cases of tape during the year. Overhead is allocated based on the number of cases of tape produced. Annual fixed overhead is budgeted at $56,000 and the variable overhead costs are budgeted at $1.50 per case. The following information summarizes the results for 2014:
.Actual production, 75,000 cases
.Purchased 275,000 ounces of material at a total cost of $343,750
.Used 266,250 ounces of material in production
.Employees worked 22,000 hours, total labor cost $275,000
.Actual overhead incurred, $175,000
How much is the controllable overhead variance for 2014?

Question

Scotch Brand Products produces packaging tape and has determined the following to be its standard cost of producing one case of budget packaging tape: $$\begin{array} { l r } 
\text { Material ( } 3.50 \text { ounces at } \$ 1.30 \text { per ounce) } & \$ 4.55 \
\text { Labor } ( 0.30 \text { hour at } \$ 12.00 \text { per hour) } & 3.60 \
\text { Overhead } & \underline { 2.20 } \
\text { Total } & \underline { \underline { \$ 10.35 } }
\end{array}$$ At the start of 2014, Scotch Brand planned to produce 80,000 cases of tape during the year. Overhead is allocated based on the number of cases of tape produced. Annual fixed overhead is budgeted at $56,000 and the variable overhead costs are budgeted at $1.50 per case. The following information summarizes the results for 2014:
.Actual production, 75,000 cases
.Purchased 275,000 ounces of material at a total cost of $343,750
.Used 266,250 ounces of material in production
.Employees worked 22,000 hours, total labor cost $275,000
.Actual overhead incurred, $175,000
How much is the controllable overhead variance for 2014?

Quizplus · Accepted Answer

The Answer of Scotch Brand Products produces packaging tape and has determined the following to be its standard cost of producing one case of budget packaging tape: $$\begin{array} { l r } 
\text { Material ( } 3.50 \text { ounces at } \$ 1.30 \text { per ounce) } & \$ 4.55 \
\text { Labor } ( 0.30 \text { hour at } \$ 12.00 \text { per hour) } & 3.60 \
\text { Overhead } & \underline { 2.20 } \
\text { Total } & \underline { \underline { \$ 10.35 } }
\end{array}$$ At the start of 2014, Scotch Brand planned to produce 80,000 cases of tape during the year. Overhead is allocated based on the number of cases of tape produced. Annual fixed overhead is budgeted at $56,000 and the variable overhead costs are budgeted at $1.50 per case. The following information summarizes the results for 2014:
.Actual production, 75,000 cases
.Purchased 275,000 ounces of material at a total cost of $343,750
.Used 266,250 ounces of material in production
.Employees worked 22,000 hours, total labor cost $275,000
.Actual overhead incurred, $175,000
How much is the controllable overhead variance for 2014?

Scotch Brand Products Produces Packaging Tape and Has Determined the Following