The standard factory overhead rate is $7.50 per machine hour ($6.20 for variable factory overhead and $1.30 for fixed factory overhead) based on 100% of normal capacity of 80,000 machine hours. The standard cost and the actual cost of factory overhead for the production of 15,000 units during August were as follows:
-Incurring actual indirect factory wages in excess of budgeted amounts for actual production results in a _____ variance.
A)quantity
B)controllable
C)volume
D)rate

Question

The standard factory overhead rate is $7.50 per machine hour ($6.20 for variable factory overhead and $1.30 for fixed factory overhead) based on 100% of normal capacity of 80,000 machine hours. The standard cost and the actual cost of factory overhead for the production of 15,000 units during August were as follows:  ​
-Incurring actual indirect factory wages in excess of budgeted amounts for actual production results in a _____ variance.
A)quantity 
B)controllable 
C)volume 
D)rate

Quizplus · Accepted Answer

Incurring actual indirect factory wages in excess of budgeted amounts for actual production results in a controllable variance because it is a cost that management could control or influence. This type of variance highlights the difference between the expected (budgeted) costs and the actual costs incurred.

The Standard Factory Overhead Rate Is $7