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James Corp. applies overhead on the basis of direct labor hours. For the month of May, the company planned production of 10,01. Compute the overhead controllable variance and classify it as favorable or unfavorable. 2. Compute the overhead volume var

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Answer #1

Solution 1 and 2:

Controllable Variance
Total actual overhead $1,02,565.00
Flexible Budget Overhead
Fixed $45,000.00
Variable $56,250.00
Total $1,01,250.00
Overhead controllable variance $1,315.00 Unfavorable
Volume Variance
Total Budgeted Fixed overhead $45,000.00
Total fixed overhead applied $50,625.00
Volume Variance $5,625.00 Favorable

Solution 3:

James Corp
Overhead variance Report
For the month ended May 31
Expected production volume 80% of capacity
Production level achieved 90% of capacity
Volume variance $5,625.00 Favorable
Controllable variance Flexible budget Actual results Variances Fav/Unfav.
Variable overhead costs:
Indirect material $20,250.00 $18,000.00 $2,250.00 Favorable
Indirect labor $28,125.00 $27,875.00 $250.00 Favorable
Power $5,625.00 $5,625.00 $0.00 No Variance
Maintenance $2,250.00 $3,065.00 $815.00 Unfavorable
Total variable costs $56,250.00 $54,565.00 $1,685.00 Favorable
Fixed overhead costs:
Rent of factory building $18,000.00 $18,000.00 $0.00 No Variance
Depreciation - Machinery $11,500.00 $11,500.00 $0.00 No Variance
Supervisory salaries $15,500.00 $18,500.00 $3,000.00 Unfavorable
Total fixed costs $45,000.00 $48,000.00 $3,000.00 Unfavorable
Total overhead costs $1,01,250.00 $1,02,565.00 $1,315.00 Unfavorable
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