Dvorak Company produced 1,000 units of product that required 3 standard hours per unit. The standard variable overhead cost per unit is $1.40 per hour. The actual variable factory overhead was $4,000. Determine the variable factory overhead controllable variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Question

Kaila Cooley

Business

18 August, 05:02

Dvorak Company produced 1,000 units of product that required 3 standard hours per unit. The standard variable overhead cost per unit is $1.40 per hour. The actual variable factory overhead was $4,000. Determine the variable factory overhead controllable variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

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Answers (1)

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Perkins · Answer 1

The variance is 4,000 - 4,200 = - 200 (favourable variance).

Explanation:

To know the production variance in this exercise, we first need to know the total standard cost, then calculate the difference between the actual cost and the standard one.

Total standard cost = production volume x hour used per one unit produced x overhead cost per hour = 1,000 x 3 x 1.4 = 4,200

So, the variance is 4,000 - 4,200 = - 200 (favourable variance).