Asked by Laura Derhamer on Jun 21, 2024
Verified
The following information relates to manufacturing overhead for Chapman Company:
Standards:
Total fixed factory overhead $450,000
Estimated production 25,000 units (100% of normal capacity)Overhead rates are based on machine hours.Standard hours allowed per unit produced 2
Fixed overhead rate $9.00 per machine hour
Variable overhead rate $3.50 per hour
Actual:
Fixed factory overhead $450,000
Production 24,000 units
Variable overhead $170,000
Compute (a) the fixed factory overhead volume variance, (b) the variable factory overhead controllable variance, and (c) the total factory overhead cost variance.
Fixed Factory Overhead
The regular, consistent costs associated with operating a factory that do not vary with production volume, such as rent, salaries, and utilities.
Variable Factory Overhead
Costs of manufacturing that fluctuate with the level of production output, such as utilities and raw materials.
Total Factory Overhead Cost Variance
The difference between the actual overhead costs incurred and the standard overhead costs previously estimated for a production process.
- Comprehend the methodology for calculating fixed factory overhead volume variance.
- Comprehend the methodology for computing variable factory overhead controllable variance.
- Comprehend the method for computing the total variance in direct materials cost.
Verified Answer
AR
b. 
c. 
Learning Objectives
- Comprehend the methodology for calculating fixed factory overhead volume variance.
- Comprehend the methodology for computing variable factory overhead controllable variance.
- Comprehend the method for computing the total variance in direct materials cost.