eBook

Question Content Area

Factory Overhead Variance Corrections

The data related to Shunda Enterprises Inc.$$s factory overhead cost for the production of $50,000$ units of product are as follows:

Line Item Description Amount

Actual: Variable factory overhead $$218,200$

Fixed factory overhead $157,300$

Standard: $76,000$ hrs$.$ at $$5\mathrm{.}00($$$2\mathrm{.}90$ for variable factory overhead$)380,000$

Productive capacity at $100\%$ of normal was $75,200$ hours, and the factory overhead cost budgeted at the level of $76,000$ standard hours was $$377,700.$ Based on these data, the chief cost accountant prepared the following variance analysis:

Line Item Description Amount Amount

Variable factory overhead controllable variance:

Actual variable factory overhead cost incurred $$218,200$

Budgeted variable factory overhead for $76,000$ hours $(220,400)$

Variance$$favorable $$(2,200)$

Fixed factory overhead volume variance:

Normal productive capacity at $100\%75,200$ hrs$.$

Standard for amount produced $(76,000)$

Productive capacity not used $800$ hrs$.$

Standard variable factory overhead rate $\backslash$times $$5\mathrm{.}00$

Variance$$unfavorable $4,000$

Total factory overhead cost variance$$unfavorable $$1,800$

Compute the following to assist you in identifying the errors in the factory overhead cost variance analysis. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Round your interim computations to the nearest cent, if required.

Factory Overhead Variance Corrections

The data related to Shunda Enterprises Inc.$\text{'}$s factory overhead cost for the production of $50,000$ units of product are as follows:

Productive capacity at $100\%$ of normal was $75,200$ hours, and the factory overhead cost budgeted at the level of $76,000$ standard

hours was $$377,700.$ Based on these data, the chief cost accountant prepared the following variance analysis:

Variable factory overhead controllable variance:

Actual variable factory overhead cost incurred $$218,200$

Budgeted variable factory overhead for $76,000$ hours $(220,400)$

Variance$-$favorable

Fixed factory overhead volume variance:

Normal productive capacity at $100\%$

Standard for amount produced

Productive capacity not used

Standard variable factory overhead rate

Variance$-$unfavorable

Total factory overhead cost variance$-$unfavorable

$$(2,200)$

Compute the following to assist you in identifying the errors in the factory overhead cost variance analysis. Enter a favorable

variance as a negative number using a minus sign and an unfavorable variance as a positive number. Round your interim

computations to the nearest cent, if required.