The standard costs and actual costs for factory overhead for the manufacture of 2,500 units of actual production are as follows:
StandardCosts
Fixed overhead (based on 10,000 hours) 3 hours @ $.80 per hour
Variable overhead3 hours @ $2.00 per hour
Actual Costs
Total variable cost, $18,000
Total fixed cost, $8,000
The amount of the factory overhead controllable variance is:
A.$2,000 unfavorable
B.$3,000 favorable
C.$0
D.$3,000 unfavorable
To find the factory overhead controllable variance, we need to compare the actual costs with the standard costs.
First, let's calculate the standard costs for fixed overhead:
Fixed overhead rate = Number of hours * Rate per hour
Fixed overhead rate = 3 hours * $0.80 per hour = $2.40
Next, let's calculate the standard costs for variable overhead:
Variable overhead rate = Number of hours * Rate per hour
Variable overhead rate = 3 hours * $2.00 per hour = $6.00
Now, let's calculate the total standard overhead costs:
Total standard overhead costs = Fixed overhead rate + Variable overhead rate
Total standard overhead costs = $2.40 + $6.00 = $8.40
The actual total variable cost is given as $18,000 and the actual total fixed cost is given as $8,000.
Finally, let's calculate the factory overhead controllable variance:
Factory overhead controllable variance = Total actual costs - Total standard costs
Factory overhead controllable variance = ($18,000 + $8,000) - $8.40
Factory overhead controllable variance = $26,000 - $8.40
Factory overhead controllable variance = $25,991.60
Based on the calculations, the amount of the factory overhead controllable variance is approximately $25,991.60.
Since none of the options provided exactly match the calculated value, the correct answer is C.$0.