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Ardmore Enterprises uses a standard cost system in its small appliance division. The standard cost of manufacturing one unit of Zeb is as follows.

Materials – 60 pounds at $1.50 per pound $90

Labor – 3 hours at $12 per hour $36

Factory overhead – 3 hours at $ 8 per hour $24

Total standard cost per unit $150

The budgeted variable factory overhead rate is $3 per labor hour, and the budgeted fixed factory overhead is $27,000 per month. During May, Ardmore produced 1,650 units of Zeb compared to a normal capacity of 1,800 units. The actual cost per unit was as follows.

Materials – 58 pounds at $1.65 per pound $95.7

Labor – 3.1 hours at $12 per hour $37.2

Factory overhead – $39930 per 1650 units $24.20

Total standard cost per unit $157.10


What is flexible budget overhead variance for May ?


Correct Answer is $1,920 favorable.


I am getting the answer 330 unfavourable arrived as under


Actual F. oh : 39930

Actual qty * std. rate = 1650*24 = 39600

Difference of above two = 330 unfavourable



Please anyone help me solve this problem to arrive at correct answer of 1920 favourable.

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