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 budget (controllable) variance of $1,500 and a favorable volume variance of $500. Elgin uses a two-variance analysis of overhead variances. The applied factory overhead in October is:

Question

Quizplus · Accepted Answer

Volume variance = Standard overhead budgeted for actual production level - Applied overhead at standard
$500 F = $130,000* - Factory overhead applied at standard
$130,500 = Factory overhead applied at standard (Favorable variance indicates that applied overhead exceeds budgeted amount.)
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Elgin Company's Budgeted Fixed Factory Overhead Costs Are $50,000 Per