Task: B&B Electric Corporation:
Standard cost:
Materials (2lb x $ per lb)...................................$10.00
Labor (4 hr x $6 per hr)....................................$24.00
Factory overhead (4 hr x #3.38* per hr............ $13.52
total standard cost...........................................$47.52
* $1.00 variable + $2.38 fixed = $3.38
Factory overhead rates are based on a normal 70% capacity and used the following flexible budget:
70% 85% 100%
Motors to be produced...... 2,100 2,550 3,000
variable overhead.... $8,400 $10,200 $12,000
fixed overhead....... $20,000 $20,000 $20,000
Actual production was 2,500 motors and factory overhead costs totaled $29,750.
Compute the factory overhead using the two-variance method (controllable variance & volume variance).