Question

Blaze Corp. applies overhead on the basis of direct labor hours. For the month of March, the company planned production of 8,000 units (80% of its production capacity of 10,000 units) and prepared the following budget:
During March, the company operated at 90% capacity (9,000 units), and it incurred the following actual overhead costs:
Overhead costs
Indirect materials. . . . . . . . . . . . . . . . . . . . . . . . . . $10,000
Indirect labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,000
Power. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500
Maintenance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000
Rent of factory building . . . . . . . . . . . . . . . . . . . . . 12,000
Depreciation—machinery . . . . . . . . . . . . . . . . . . . 19,200
Taxes and insurance. . . . . . . . . . . . . . . . . . . . . . . . 3,000
Supervisory salaries . . . . . . . . . . . . . . . . . . . . . . . . 14,000
Total actual overhead costs. . . . . . . . . . . . . . . . . . .$81,700
1. Compute the overhead controllable variance.
2. Compute the overhead volume variance.
3. Prepare an overhead variance report at the actual activity level of 9,000 units


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  • CreatedApril 23, 2015
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