Claymore Corp. has the following information about its standards and production activity for September. The controllable variance is: $\begin{array}{lll}
\text { Actual total factory overhead incured } &\$28,175\
\text {Standard factory overhead: } &\
\text { Variable overhead } &\$3.10&\text { per unit produced }\
\text { Fixed overhead } &\
\text { $ \$ 12,000 / 6,000 $ estimated units to be produced } &\$2&\text {per unit}\
\text { Actual units produced } &4,800&\text { units}\
\end{array}$

A) $2,400U.
B) $1,295F.
C) $1,295U.
D) $3,695U.
E) $2,400F.

Question

Claymore Corp. has the following information about its standards and production activity for September. The controllable variance is: $\begin{array}{lll}
  \text { Actual total factory overhead incured } &\$28,175\
 \text {Standard factory overhead:  } &\
 \text {  Variable overhead } &\$3.10&\text { per unit produced }\
 \text { Fixed overhead } &\
 \text { $ \$ 12,000 / 6,000 $ estimated units to be produced } &\$2&\text {per unit}\
 \text {  Actual units produced } &4,800&\text { units}\
\end{array}$

A) $2,400U.
B) $1,295F.
C) $1,295U.
D) $3,695U.
E) $2,400F.

Quizplus · Accepted Answer

To find the controllable variance, we need to compare the actual cost with the budgeted cost for the actual level of activity.

Direct labor cost: 
Actual hours worked = 4,800 
Actual rate paid = $16 
Actual cost incurred = 4,800 x $16 = $76,800

Budgeted cost for actual level of activity: 
Standard hours allowed = 4,500 
Standard rate per hour = $15 
Budgeted cost = 4,500 x $15 = $67,500

Controllable variance = Actual cost incurred - Budgeted cost 
= $76,800 - $67,500 
= $9,300U

Therefore, the correct answer is C, $1,295U.

Claymore Corp A) $2,400U