*Actual hours are equal to standard hours for units produced.
Tthe variable factory overhead controllable variance is
A) $8,981.75 favorable
B) $7,280.75 unfavorable
C) $8,981.75 unfavorable
D) $7,280.75 favorable

Question

*Actual hours are equal to standard hours for units produced.
Tthe variable factory overhead controllable variance is
A) $8,981.75 favorable 
B) $7,280.75 unfavorable 
C) $8,981.75 unfavorable 
D) $7,280.75 favorable

Quizplus · Accepted Answer

The formula for the factory overhead controllable variance is:
Actual Factory Overhead - Budgeted Factory Overhead (based on standard hours) = FO Controllable Variance
From the given information, we know that actual hours are equal to standard hours, so we can use actual hours to calculate both actual factory overhead and budgeted factory overhead. 
Actual factory overhead = $122,200 
Budgeted factory overhead (based on standard hours) = $114,040 
So, FO Controllable Variance = $122,200 - $114,040 = $8,160 unfavorable. 
Therefore, the best choice is B, which is closest to the calculated FO Controllable Variance.

*Actual Hours Are Equal to Standard Hours for Units Produced