Reference no: EM131643352

Problem - Ayala Corporation accumulates the following data relative to jobs started and finished during the month of June 2017.

Costs and Production Data Actual Standard

Raw materials unit cost$2.25$2.10Raw materials units used10,60010,000Direct labor payroll$120,960$120,000Direct labor hours worked14,40015,000Manufacturing overhead incurred$189,500Manufacturing overhead applied$193,500Machine hours expected to be used at normal capacity42,500Budgeted fixed overhead for June$55,250Variable overhead rate per machine hour$3.00Fixed overhead rate per machine hour$1.30

Overhead is applied on the basis of standard machine hours. 3.00 hours of machine time are required for each direct labor hour. The jobs were sold for $400,000. Selling and administrative expenses were $40,000. Assume that the amount of raw materials purchased equaled the amount used.

Compute the overhead controllable variance and the overhead volume variance.