Bluecap Co. uses a standard cost system and flexible budgets for control purposes. The following...
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Accounting
Bluecap Co. uses a standard cost system and flexible budgets for control purposes. The following budgeted information pertains to 2019:
Denominator volumenumber of units
8,000
Denominator volumepercent of capacity
80
%
Denominator volumestandard direct labor hours (DLHs)
24,000
Budgeted variable factory overhead cost at denominator volume
$
103,200
Total standard factory overhead rate per DLH
$
15.10
During 2019, Bluecap worked 28,000 DLHs and manufactured 9,600 units. The actual factory overhead cost for the year was $14,000 greater than the flexible budget amount for the units produced, of which $6,000 was due to fixed factory overhead. In preparing a budget for 2020 Bluecap decided to raise the level of operation to 90% of capacity (a level it considers to be "practical capacity"), to manufacture 9,000 units at a budgeted total of 27,000 DLHs. The variable overhead spending variance in 2019 for Bluecap Co. (to the nearest whole dollar) was:
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