Steep, Inc.budgeted 6,000 cup holders for March.Each holder is sold for $12.Actual production for March was 6,300 cup holders.Manufacturing overhead is applied based on units produced.Standards and actual costs follow for March: $\begin{array}{|l|c|c|}\hline & \text { Standards } & \text { Actual } \
\hline
\text { Materials } & 1.1 \text { pounds } @ \$ 2.40 \text { a pound }&6,400 \text { pounds purchased for } \$ 15,040 \text {; }\&& 6,450 \text { pounds used }\\hline \text { Labor } & 0.10 \text { hours } @ \$ 14.00 \text { per hour } & 620 \text { hours } @ \$ 14.30 \text { per hour } \
\hline \text { Variable overhead } & \$ 16,800 & \$ 18,400 \\hline \text { Eixed overhead } & \$ 9,600 & \$ 10,300 \
\hline
\end{array}$ How much is the overhead controllable variance?

Question

Steep, Inc.budgeted 6,000 cup holders for March.Each holder is sold for $12.Actual production for March was 6,300 cup holders.Manufacturing overhead is applied based on units produced.Standards and actual costs follow for March: $\begin{array}{|l|c|c|}\hline & \text { Standards } & \text { Actual } \
 \hline 
\text { Materials } & 1.1 \text { pounds } @ \$ 2.40 \text { a pound }&6,400 \text { pounds purchased for } \$ 15,040 \text {; }\&& 6,450 \text { pounds used }\\hline \text { Labor } & 0.10 \text { hours } @ \$ 14.00 \text { per hour } & 620 \text { hours } @ \$ 14.30 \text { per hour } \
\hline \text { Variable overhead } & \$ 16,800 & \$ 18,400  \\hline \text { Eixed overhead } & \$ 9,600 & \$ 10,300 \
\hline
\end{array}$ How much is the overhead controllable variance?

Quizplus · Accepted Answer

The overhead controllable variance is calculated by subtracting the actual variable and fixed overhead costs from the budgeted (or standard) variable and fixed overhead costs. In this case, the actual variable overhead is $18,400 and the actual fixed overhead is $10,300, totaling $28,700. The budgeted variable overhead is $16,800 and the budgeted fixed overhead is $9,600, totaling $26,240. The difference is $28,700 - $26,240 = $2,460 unfavorable, indicating that the actual overhead costs were higher than the budgeted costs by $2,460.

Steep, Inc How Much Is the Overhead Controllable Variance? A)$1,460 Unfavorable B)$480

Steep, Inc How Much Is the Overhead Controllable Variance?
A)$1,460 Unfavorable
B)$480