Solution-Compute the overhead controllable variance

Compute the overhead controllable variance

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Reference no: EM131611177

Problem - Blaze Corp. applies overhead on the basis of direct labor hours. For the month of March, the company planned production of 10.000 units (80% of its production capacity of 12,500 units) and prepared the following budget:

Overhead Budget	Operating Levels
Overhead Budget	80%
Production in units	10,000
Standard direct labor hours	24,000
Budgeted overhead
Variable overhead costs
Indirect materials	$25.000
Indirect labor	35,000
Power	7,600
Maintenance	4,400
Total variable costs	72,000
Fixed overhead costs
Rent of factory building	25,000
Depreciation-machinery	35,000
Taxes and insurance	4,000
Supervisory salaries	20,000
Total fixed costs	84,000
Total overhead costs	$156,000

During March, the company operated at 90% capacity (11,250 units), and it incurred the following actual overhead costs:

Overhead Costs
Indirect materials	$25.000
Indirect labor	35,000
Power	8,550
Maintenance	6,590
Rent of factory building	25,000
Depreciation-machinery	33,000
Taxes and insurance	4.500
Supervisor/ salaries	22,000
Total actual overhead costs	$159,640

1. Compute the overhead controllable variance.

2. Compute the overhead volume variance.

3. Prepare an overhead variance report at the actual activity level of 9,000 units.

Reference no: EM131611177

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Compute the overhead controllable variance

Reference no: EM131611177

Reference no: EM131611177

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