Reference no: EM132561619

Factory Overhead Variance Analysis, Two-Variance Method

The normal capacity of Howard Company's Assembly Department is 12,000 machine hours per month. At normal capacity, the standard factory overhead rate is $12.50 per machine hour, based on $96,000 of budgeted fixed cost per month and a variable cost rate of $4.50 per machine hour. During April, the department operated at 12,500 machine hours, with actual factory overhead of $166,000. The number of standard machine hours allowed for the production actually attained is 11,000.

Required:

Question 1: Compute the overall factory overhead variance and then break the overall variance down into the controllable variance and the volume variance. Indicate whether the variance are favorable or unfavorable.