Blumen Textiles Corporation began January with a budget for 90,000 hours of production in the Weaving Department. The department has a full capacity of 100,000 hours under normal business conditions. The budgeted overhead at the planned volumes at the beginning of April was as follows:

Blumen Textiles Corporation began January with a b

The actual factory overhead was $782,000 for April. The actual fixed factory overhead was as budgeted. During April, the Weaving Department had standard hours at actual production volume of 92,500 hours. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Round your interim computations to the nearest cent, if required.

a. Determine the variable factory overhead controllable variance.
$ 2

b. Determine the fixed factory overhead volume variance.
$ 4

Additional information:

April:

Variable overhead $540,000

Fixed overhead 240,000

Total $780,000

a. Determine the variable factory overhead controllable variance.

actual variable overhead controllable variance = total actual overhead - total budgeted fixed overhead = $782,000 - $240,000 = $542,000

standard variable overhead = (standard hours x variable overhead rate) = 92,500 hours x ($540,000 / 90,000 hours) = 92,500 x $6 per hour = $555,000

variable overhead controllable variance = actual variable controllable variance - standard variable overhead = $542,000 - $555,000 = -$13,000 favorable variance

b. Determine the fixed factory overhead volume variance.

full capacity - standard hours = 100,000 hours - 92,500 = 7,500 hours

7,500 hours x (fixed factory overhead rate) = 7,500 hours x ($240,000 / 100,000 hours) = 7,500 hours x $2.40 = $18,000 unfavorable variance

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