Bluecap Co
Subject:AccountingPrice:2.87 Bought7
Bluecap Co. uses a standard cost system and flexible budgets for control purposes. The following budgeted information pertains to 2019:
| Denominator volume—number of units | 7,000 | ||
| Denominator volume—percent of capacity | 70 | % | |
| Denominator volume—standard direct labor hours (DLHs) | 35,000 | ||
| Budgeted variable factory overhead cost at denominator volume | $ | 102,700 | |
| Total standard factory overhead rate per DLH | $ | 15.10 | |
During 2019, Bluecap worked 44,000 DLHs and manufactured 9,000 units. The actual factory overhead cost for the year was $15,000 greater than the flexible budget amount for the units produced, of which $5,000 was due to fixed factory overhead. In preparing a budget for 2020 Bluecap decided to raise the level of operation to 90% of capacity (a level it considers to be "practical capacity"), to manufacture 8,400 units at a budgeted total of 25,200 DLHs.
The total factory overhead spending variance in 2019 (to the nearest whole dollar), based on a three-variance breakdown (decomposition) of the total overhead variance for Bluecap Co., was: (Round your intermediate calculation to 2 decimal places.)
Multiple Choice
-
$3,690 favorable.
-
$11,930 unfavorable.
-
$15,530 favorable.
-
$17,770 favorable.
-
$17,930 unfavorable.
Purchase A New Answer
Custom new solution created by our subject matter experts
GET A QUOTE
Answer Preview
ANSWER
Variable overhear efficiency variance=(actual DLHs - Allowed DLHs)8(standard variable overhead rate/DLH)
=(44,000 -(9,000 (35,000/7,000))*(102,700/35,000)
=(44,000-45,000)*2.9343
=2,930 Favorable
Total Flexible budgets variance=Total overhead spending variance + Variable overhead efficiency variance
$15,000 U=Total overhead spending variance + 2,930 F
Total overhead spending variance = $15,000+ 2,930 F
=$17,930 Unfavorable
