Levelor company's flexible budget shows $10,750 of overhead at 75% of capacity, which was the operating level achieved during may. however, the company applied overhead to production during may at a rate of $2.10 per direct labor hour based on a budgeted operating level of 6,160 direct labor hours (90% of capacity). if overhead actually incurred was $11,227 during may, the controllable variance for the month was:

The controllable variance for the month was $1,709 unfavorable

Explanation:

Controllable variance: The controllable variance show a difference between actual overhead expenses incurred and budgeting operating level based on direct labor hour.

In mathematically,

Controllable variance = Actual overhead expenses - budgeting operating level based on direct labor hour

where,

Actual overhead expenses = $11,227

And, budgeted operating level based on direct labor hour

= budgeted operating level  × direct labor per hour

= 6,160 × $2.10

= $12,936

Now, put these values on the above formula:

So,

Controllable variance = $11,227 - $12,936 = $1,709 unfavorable

Hence, the controllable variance for the month was $1,709 unfavorable

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