Palek Company has adopted the following standards: Palek's January budget was based on normal volume of 40,000 standard labor hours. During January, Palek produced 7,900 units with records indicating the following data: Assuming Palek uses the three-variance method of analyzing factory overhead, compute the following variances for the month of January and indicate whether each is favorable or unfavorable:
a.Factory overhead budget variance
b.Factory overhead capacity variance
c.Factory overhead efficiency variance

Question

Palek Company has adopted the following standards:  Palek's January budget was based on normal volume of 40,000 standard labor hours. During January, Palek produced 7,900 units with records indicating the following data:  Assuming Palek uses the three-variance method of analyzing factory overhead, compute the following variances for the month of January and indicate whether each is favorable or unfavorable: 
a.Factory overhead budget variance
b.Factory overhead capacity variance
c.Factory overhead efficiency variance

Quizplus · Accepted Answer

The Answer of Palek Company has adopted the following standards:  Palek's January budget was based on normal volume of 40,000 standard labor hours. During January, Palek produced 7,900 units with records indicating the following data:  Assuming Palek uses the three-variance method of analyzing factory overhead, compute the following variances for the month of January and indicate whether each is favorable or unfavorable: 
a.Factory overhead budget variance
b.Factory overhead capacity variance
c.Factory overhead efficiency variance

Palek Company Has Adopted the Following Standards: Palek's January