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B&B Electric Corporation: Two-variance overhead analysis

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:

at 70% capacity

motors.............2,100
variable OH....$8,400
fixed OH.......$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).

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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* ...

Solution Summary

Your tutorial is attached in Excel. Click in cells to see how each amount was figured.

$2.19