A company's flexible budget for 53,000 units of production showed variable overhead costs of $92,750 and fixed overhead costs of $69,000. The company incurred overhead costs of $146,500 while operating at a volume of 45,000 units. The total controllable cost variance is:

Total controllable cost Variance          $1,250 Favourable

Explanation:

The uncontrollable cost variance is the difference between the

actual overhead cost and the standard cost for the actual volume produced.

Step 1

standard variable overhead per unit

= Budget amount/activity level

= $92,750/53,000

= $1.75

Step 2

Standard cost for the actual level of 45,000 units

=$1.75× 45,000

=$78,750

Step 3

Actual variable overhead(controllable) incurred

= $146,500 - $69,000

= $ 77,500.00

step 4

Controllable overhead variance :

Standard cost                                              =$78,750

Actual cost                                                  $77,500

Variance                                                     1,250 Favourable

statement of owner's equity;

a.