Bluecap Co.uses a standard cost system and flexible budgets for control purposes.The following budgeted information pertains to 2010:
During 2010,Bluecap worked 28,000 direct labor hours and manufactured 9,600 units.The actual factory overhead was $14,000 greater than the flexible budget amount for the units produced,of which $6,000 was due to fixed factory overhead.In preparing a budget for 2011 Bluecap decided to raise the level of operation to 90% of capacity,to manufacture 9,000 units at a budgeted total of 27,000 direct labor hours.
The factory overhead spending variance in 2010,based on a three-variance breakdown (decomposition)of the total overhead variance is:
A)$3,200 favorable.
B)$11,440 unfavorable.
C)$15,040 favorable.
D)$17,280 favorable.
E)$17,440 unfavorable.

Question

Bluecap Co.uses a standard cost system and flexible budgets for control purposes.The following budgeted information pertains to 2010: 
During 2010,Bluecap worked 28,000 direct labor hours and manufactured 9,600 units.The actual factory overhead was $14,000 greater than the flexible budget amount for the units produced,of which $6,000 was due to fixed factory overhead.In preparing a budget for 2011 Bluecap decided to raise the level of operation to 90% of capacity,to manufacture 9,000 units at a budgeted total of 27,000 direct labor hours.
The factory overhead spending variance in 2010,based on a three-variance breakdown (decomposition)of the total overhead variance is:
A)$3,200 favorable. 
B)$11,440 unfavorable. 
C)$15,040 favorable. 
D)$17,280 favorable. 
E)$17,440 unfavorable.

Quizplus · Accepted Answer

The Answer of Bluecap Co.uses a standard cost system and flexible budgets for control purposes.The following budgeted information pertains to 2010: 
During 2010,Bluecap worked 28,000 direct labor hours and manufactured 9,600 units.The actual factory overhead was $14,000 greater than the flexible budget amount for the units produced,of which $6,000 was due to fixed factory overhead.In preparing a budget for 2011 Bluecap decided to raise the level of operation to 90% of capacity,to manufacture 9,000 units at a budgeted total of 27,000 direct labor hours.
The factory overhead spending variance in 2010,based on a three-variance breakdown (decomposition)of the total overhead variance is:
A)$3,200 favorable. 
B)$11,440 unfavorable. 
C)$15,040 favorable. 
D)$17,280 favorable. 
E)$17,440 unfavorable.