Caroline, Inc. planned to produce 20,000 units of product and work 100,000 direc
ID: 2395726 • Letter: C
Question
Caroline, Inc. planned to produce 20,000 units of product and work 100,000 direct labor hours in 2016. Manufacturing overhead the 100,000 direct labor hours level of activity was estimated to be: varibe mandaturing ohd 70,000 Flxed manufacturing overhead Total manufacturing overhead $1,000,000 At the end of 2016,19,000 units of product were actually produced and 98,000 actual direct labor hours were w orked. Toal ual 300,000 overhead costs for 2016 were $935,000. Compute the total overhead variance. Identify whether the variance is favorable or unfavorable? Total overhead variance 65,000 Unfavorable Compute the overhead controllable variance. Identify whether the variance is favorable or unfavorable? Overtead contrlilablb variance Unfavorable Compute the overhead volume varlance. Identifly whether the variance is favorable or unfavorable? Overhead volume variance Click if you would like to Show Work for this question: en Show.Wise version 4.24.7 N0 fe fg 2Explanation / Answer
1) Total overhead variance = Actual overhead - Overhead applied
= $935,000 - (19,000 units * 5 hours * $10)
= $935,000 - $950,000
= $15,000 favorable
2) Overhead controllable variance = Actual overhead - Overhead budgeted
= $935,000 - (95,000 units * $7 + 300,000)
= $935,000 - $965,000
= $30,000 favorable
3) Overhead volume variance = (Normal hours - Standard hours) * Fixed overhead rate
= (100,000 - 95,000) * $3/hour
= $15,000 unfavorable