Elgin Company's budgeted fixed factory overhead costs are $50,000 per month plus a variable factory overhead rate of $4.00 per direct labor hour. The standard direct labor hours allowed for October production were 20,000. An analysis of the factory overhead indicates that in October Elgin had an unfavorable controllable variance of $1,500 and a favorable volume variance of $500. Elgin uses a two-variance analysis of overhead variances. The actual factory overhead incurred in October is:

Question

Quizplus · Accepted Answer

Controllable variance = Actual factory overhead - Standard overhead budgeted for actual activity level*
$1,500 U = Actual factory overhead - $130,000
Actual factory overhead = $131,500 (Unfavorable variance indicates that actual factory overhead exceeds budgeted amounts.)
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Elgin Company's Budgeted Fixed Factory Overhead Costs Are $50,000 Per