Jackson Manufacturing planned to produce 20000 units of product and work at the 60000 direct labor hours level of activity for 2016. Manufacturing overhead at this level of activity and the predetermined overhead rate are as follows: $\begin{array}{llc}
&&\text {Predetermined }\
&&\text {Overhead Rate per}\
&&\text { Direct Labor Hour}\
\text { Variable manufacturing overhead } & \$ 300,000 & \$ 5 \
\text { Fixed manufacturing overhead } & 120,000 &2\
\text { Total manufacturing overhead }&\$420,000&\$7
\end{array}$ At the end of 2016 21000 units were actually produced and 61500 direct labor hours were actually worked. Total actual manufacturing overhead costs were $430000.
Instructions
Using a two-variance analysis of manufacturing overhead calculate the following variances and indicate whether they are favorable or unfavorable:
(a) Overhead controllable variance.
(b) Overhead volume variance.

Question

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The Answer of Jackson Manufacturing planned to produce 20000 units of product and work at the 60000 direct labor hours level of activity for 2016. Manufacturing overhead at this level of activity and the predetermined overhead rate are as follows: $\begin{array}{llc}
&&\text {Predetermined }\
&&\text {Overhead Rate per}\
&&\text { Direct Labor Hour}\
\text { Variable manufacturing overhead } & \$ 300,000 & \$ 5 \
\text { Fixed manufacturing overhead } & 120,000 &2\
\text { Total manufacturing overhead }&\$420,000&\$7
\end{array}$ At the end of 2016 21000 units were actually produced and 61500 direct labor hours were actually worked. Total actual manufacturing overhead costs were $430000.
Instructions
Using a two-variance analysis of manufacturing overhead calculate the following variances and indicate whether they are favorable or unfavorable:
(a) Overhead controllable variance.
(b) Overhead volume variance.

Jackson Manufacturing Planned to Produce 20000 Units of Product and Work