Frogue Corporation uses a standard cost system.The following information was provided for the period that just ended: $\begin{array}{ll}
\text { Actual price per kilogram } & \$ 2.50 \
\text { Actual kilograms of material used } & 31,000 \
\text { Actual hourly labor rate } & \$ 18.10 \
\text { Actual hours of production } & 4,900 \text { labor hrs. } \
\text { Standard price per kilogram } & \$ 2.80 \
\text { Standard kilograms per completed unit } & 6 \text { kilograms } \
\text { Standard hourly labor rate } & \$ 18.00 \
\text { Standard time per completed unit } & 1 \text { hr. }\
\text { Actual total factory overhead } & \$ 34,900 \
\text { Actual fixed factory overhead } & \$ 18,000 \
\text { Standard fixed factory overhead rate } & \$ 1.20 \mathrm{per} \text { labor hour } \
\text { Standard variable factory overhead rate } & \$ 3.80 \mathrm{per} \text { labor hour } \
\text { Maximum plant capacity } & 15,000 \text { hours } \
\text { Units completed during the period } & 5,000
\end{array}$ ? The variable factory overhead controllable variance is:
A) $6,000 favorable.
B) $2,100 favorable.
C) $2,100 unfavorable.
D) $6,000 unfavorable.

Question

Quizplus · Accepted Answer

The variable factory overhead controllable variance is calculated as the difference between the actual variable overhead and the standard variable overhead for the actual hours worked. The standard variable overhead rate is $3.80 per labor hour, and the actual hours worked are 4,900. Therefore, the standard variable overhead is 4,900 hours * $3.80 = $18,620. The actual total factory overhead is $34,900, and the actual fixed factory overhead is $18,000, so the actual variable overhead is $34,900 - $18,000 = $16,900. The variance is $18,620 - $16,900 = $1,720 favorable, but the closest choice is $2,100 favorable.

Frogue Corporation Uses a Standard Cost System ? the Variable Factory Overhead Controllable Variance Is: A) $6,000

Frogue Corporation Uses a Standard Cost System ? the Variable Factory Overhead Controllable Variance Is:
A) $6,000