At the denominator activity level, Norland Company's total overhead budget for 25,000 units of production shows variable overhead costs of $36,000 and fixed overhead costs of $32,000. During the most recent period, the company incurred total overhead costs of $61,400 to manufacture 20,000 units.

The total factory overhead variance for Norland Co. for the most recent period, to the nearest whole dollar, was:
A) $200 favorable.
B) $600 unfavorable.
C) $6,000 unfavorable.
D) $6,600 favorable.
E) $7,000 unfavorable.

Question

At the denominator activity level, Norland Company's total overhead budget for 25,000 units of production shows variable overhead costs of $36,000 and fixed overhead costs of $32,000. During the most recent period, the company incurred total overhead costs of $61,400 to manufacture 20,000 units.

The total factory overhead variance for Norland Co. for the most recent period, to the nearest whole dollar, was:

The total factory overhead variance for Norland Co. for the most recent period, to the nearest whole dollar, was:
A) $200 favorable.
B) $600 unfavorable.
C) $6,000 unfavorable.
D) $6,600 favorable.
E) $7,000 unfavorable.

Quizplus · Accepted Answer

The budgeted overhead for 20,000 units is $28,800 (variable) + $32,000 (fixed) = $60,800. The actual overhead was $61,400, resulting in a variance of $61,400 - $60,800 = $600 unfavorable.

At the Denominator Activity Level, Norland Company's Total Overhead Budget