Question

The standard costs and actual costs for factory overhead for the manufacture of 2,700 units of actual production are as follows:

Standard Costs
Fixed overhead (based on 10,000 hours)	3 hours per unit @ $0.76 per hour
Variable overhead	3 hours per unit @ $2.02 per hour
Actual Costs
Total variable cost, $18,200
Total fixed cost, $8,100

The amount of the total factory overhead cost variance is

a.$4,726 favorable

b.$3,282 favorable

c.$3,282 unfavorable

d.$1,838 unfavorable

Answer 1

Compute total factory overhead cost variance as follows: Total factory overhead cost variance Variable factory overhead + (Standard hours ) Fixed factory overhead Standard rate = $18.200 + $8.100 - (2.700 x3 (0.76+2.02)) = $26,300 - $22,518 = $3,782 Favorable Thus, total factory overhead cost variance is $3,782 favorable. In the given question, the MCQ option do not possess the correct answer thus, the nearest answer is chosen or that might b mistyped because there is difference of only one digit. Thus, correct answer is b.