Question

Required 2 Required 1 Required 3 Compute the overhead volume variance. Classify as favorable or unfavorable. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance. Do not round intermediate calculations.) Volume Variance Volume variance Required 1 Required 3

Answer 1

Solution 1:

Controllable variance
Particulars		Amount
Total actual overhead		$81,700
Flexible budget overhead:
Variable overhead (32000/8000*9000)	$36,000
Fixed overhead	$48,000
Total		$84,000
Overhead controllable variance		$2,300	Favorable

Solution 2:

Volume Variance
Fixed overhead applied ($48,000/8000*9000)	$54,000
Budgeted fixed overhead	$48,000
Volume variance	$6,000	Favorable

Solution 3:

Blaze Corp.
Overhead variance report
For the Month Ended March 31
Expected Production volume	80% of capacity
Production level achieved	90% of capacity
Volume variance	$6,000 Favorable
Particulars	Flexible Budget	Actual	Variance	Fav/Unfav.
Variable overhead costs:
Indirect materials	$11,250.00	$10,000.00	$1,250.00	Favorable
Indirect labor	$18,000.00	$16,000.00	$2,000.00	Favorable
Power	$4,500.00	$4,500.00	$0.00	No Variance
Maintenance	$2,250.00	$3,000.00	$750.00	Unfavorable
Total variable overhead cost	$36,000.00	$33,500.00	$2,500.00	Favorable
Fixed overhead costs:
Rent of factory building	$12,000.00	$12,000.00	$0.00	No Variance
Depreciation machinery	$20,000.00	$19,200.00	$800.00	Favorable
Taxes and insurance	$2,400.00	$3,000.00	$600.00	Unfavorable
Supervisory salaries	$13,600.00	$14,000.00	$400.00	Unfavorable
Total fixed overhead cost	$48,000.00	$48,200.00	$200.00	Unfavorable
Total costs	$84,000.00	$81,700.00	$2,300.00	Favorable