Question

The following data is given for the Bahia Company:

Budgeted production	1,040 units
Actual production	906 units
Materials:
Standard price per pound	$1.866
Standard pounds per completed unit	11
Actual pounds purchased and used in production	9,667
Actual price paid for materials	$19,817
Labor:
Standard hourly labor rate	$14.62 per hour
Standard hours allowed per completed unit	4.0
Actual labor hours worked	4,665.9
Actual total labor costs	$71,155
Overhead:
Actual and budgeted fixed overhead	$1,181,000
Standard variable overhead rate	$26.00 per standard labor hour
Actual variable overhead costs	$130,645
Overhead is applied on standard labor hours.

The variable factory overhead controllable variance is

a.$152,167.31 unfavorable

b.$152,167.31 favorable

c.$36,421.00 unfavorable

d.$36,421.00 favorable

Answer 1

Variable Factory Overhead Controllable Variance = (Std VOH Cost - Actual VOH Cost)

Actual Variable OH Cost = $130,645

Standard Variable OH Cost = Std hrs*Std rate per hour

= (906 units*4 hrs per unit)*$26 per hour

= 3,624 hrs*$26 per hour = $94,224

Variable Factory OH Controllable Variance = Std Variable OH - Actual Variable OH

= $94,224 - $130,645 = $36,421 Unfavorable

Therefore the variable overhead controllable variance is $36,421 Unfavorable. Hence the correct option is C) $36,421 Unfavorable.