Respuesta :
The total overhead variance is an unfavorable $2,000 (the overhead account has a $2,000 debit balance). The volume variance contributed a $5,000 unfavorable.
What is total overhead variance?
The total overhead variance is the difference between the total overhead absorbed and the actual total overhead incurred.
Total overhead charged to the overhead account was $42,000, the amount applied was $40,000, the difference, $2,000, is the total unfavorable overhead variance.
Volume variance: the amount applied- the budgeted fixed overhead + standard hours allowed x variable at the budgeted rate.
Derive rates : The budgeted rates are derived from the $40,000 applied based on 5,000 hours. The total rate is $8.00 per hour ($40,000/5,000). The $3.00 variable rate is given, so the fixed rate must be $5.00.
Fixed costs: Budgeted fixed costs are the budgeted production of 6,000 units* 1 hour times the $5.00 rate or $30,000.
Variable costs: Variable overhead based on allowed hours is $3.00 times 5,000 or $15,000. The budget based on standard hours allowed is, therefore, $45,000 ($30,000 fixed + $15,000 variable).
Variance computation: The volume variance is the difference between the $45,000 allowed and the $40,000 actually applied, $5,000.
Budget standard hours allowed: Fixed - 5.00 *6,000 = 30,000
Variable- 3.00 * 5,000 = 15,000
Overhead applied = 45,000
Overhead applied: Fixed- 5.00 * 5,000 = 25,000
Variable- 3.00 * 5,000 = 15,000
Overhead applied = 40,000 and Net overapplied volume= 5,000
Net overapplied overhead = $2,000
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