Reference no: EM131884570
Problem - The Standard specifications for an electric motor manufactured by AAA Electric Co. follow:
Standard Cost per Unit:
Materials (2lb x $5 per lb) $10.00
Labor ($4 hr x $12 per hr) $48.00
Factory Overhead (4hr x $3.38* per hr) $13.52
Total Standard Cost $71.52
*1.00 variable + 2.38 fixed = 3.38
Factory overhead rates are based on a normal 70% capacity and use the following flexible budget:
Normal
70% 80% 100%
Motors to be produced 2100 2550 3000
Variable Overhead $8400 $10200 $12000
Fixed Overhead $20000 20000 20000
The actual production was 2500 motors and factory overhead costs totaled $29750.
Calculate the factory overhead variances using the two-variance method.
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