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A company's flexible budget for 51,000 units of production showed variable overhead costs of $84,150 and fixed overhead costs of $67,000. The company incurred overhead costs of $136,720 while operating at a volume of 43,000 units. The total controllable cost variance is:_________

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pedrocarratore

Answer:

$1,230 favorable

Explanation:

Variable overheard cost per unit:

[tex]\frac{\$ 84,150}{51,000} = \$1.65[/tex]

Fixed overhead costs: $67,000

Overhead costs for 43,000 units: $136,720

Projected overhead cost for 43,000 units (C):

[tex]C= \$43,000*1.65 + \$67,000\\C=\$137,950[/tex]

Total controllable cost variance (V) :

[tex]V= $137,950 - $136,720 \\V = $1,230[/tex]

Since the company spent less than projected the total controllable cost variance is $1,230 favorable

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