Agnew Corporation uses a standard cost system. The following information was pro
ID: 2349332 • Letter: A
Question
Agnew Corporation uses a standard cost system. The following information was provided for the period that just ended:Actual price per kilogram $1.76
Actual kilograms of material used 61,500
Actual hourly labor rate $20.60
Actual hours of production 8,850
Standard price per kilogram $1.80
Standard kilograms per completed unit 5 kilograms
Standard hourly labor rate $20.00
Standard time per completed unit 3/4 hr.
Actual total factory overhead $64,500
Fixed factory overhead $30,000
Standard fixed factory overhead rate $3.00 per labor hour
Standard variable factory overhead rate $5.00 per labor hour
Maximum plant capacity 10,000 hours
Plant operated during the period 9,000 hours
Units completed during the period 12,000
The variable factory overhead controllable variance is:
a. $10,500 favorable
b. $7,500 favorable
c. $7,500 unfavorable
d. $10,500 unfavorable
Explanation / Answer
Actual price per kilogram $1.76 Actual kilograms of material used 61,500 Actual hourly labor rate $20.60 Actual hours of production 8,850 Standard price per kilogram $1.80 Standard kilograms per completed unit 5 kilograms Standard hourly labor rate $20.00 Standard time per completed unit 3/4 hr. Actual total factory overhead $64,500 Fixed factory overhead $30,000 Standard fixed factory overhead rate $3.00 per labor hour Standard variable factory overhead rate $5.00 per labor hour Maximum plant capacity 10,000 hours Plant operated during the period 9,000 hours Units completed during the period 12,000 The variable factory overhead controllable variance is: d. $10,500 unfavorable