The standard costs and actual costs for factory overhead for the manufacture of 2,500 units of actual production are as follows: The amount of the factory overhead controllable variance is:
A) $2,000 unfavorable
B) $3,000 favorable
C) $0
D) $3,000 unfavorable

Question

The standard costs and actual costs for factory overhead for the manufacture of 2,500 units of actual production are as follows:  The amount of the factory overhead controllable variance is:
A) $2,000 unfavorable 
B) $3,000 favorable 
C) $0 
D) $3,000 unfavorable

Quizplus · Accepted Answer

The formula for calculating the factory overhead controllable variance is:
Actual factory overhead incurred - Budgeted factory overhead (based on standard hours allowed for actual production) = Controllable variance
Actual factory overhead incurred: ($18,000 + $3,500) = $21,500
Budgeted factory overhead: ($10 per standard hour x 3,000 standard hours) = $30,000
Controllable variance: $21,500 - $30,000 = $-8,500 (unfavorable)
Therefore, the factory overhead controllable variance is $3,000 unfavorable, which is option D.

The Standard Costs and Actual Costs for Factory Overhead for the Manufacture