Medal Corporation uses direct labor hours to allocate factory overhead. During the period, the company produced...

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Answer 1

Answer #1

Solution a:

Variable factory overhead rate = Budgeted variable overhead / Budgeted direct labor hours = $18,450 / 3375 = $5.47 per hour

Solution b:

Variable factory overhead controllable variance = Standard variable overhead cost - Actual variable overhead cost

= (5100*0.75*$5.466666) - $21,000 = $90 U

Solution c:

Variable factory overhead controllable variance in unfavorable.

Solution d:

Fixed factory overhead rate = Budgeted fixed overhead at normal capacity / Budgeted labor hours at normal capacity

= $20,000 / 3750 = $5.33 per labor hour

Solution e:

Fixed overhead applied = Standard hours * Fixed factory overhead rate = 5100*0.75*$5.3333333 = $20,400

Fixed factory overhead volume variance = Fixed overhead applied - Budgeted fixed overhead

= $20,400 - $20,000 = $400 F

Solution f:

Fixed factory overhead volume variance is favorable.

Solution g:

Total overhead applied = Standard variable overhead + Fixed overhead applied

= (5100*0.75*$5.466666) + $20,400 = $41,310

Actual overhead incurred = $21,000 + $20,000 = $41,000

Total factory overhead cost variance = Total overhead applied - Actual overhead applied = $41,310 - $41,000 = $310 F

The variance is favorable.

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