Question

In October, Roby Company reports 21,220 actual direct labor hours, and it incurs $121,060 of manufacturing overhead costs. Standard hours allowed for the work done is 22,450 hours. The predetermined overhead rate is $5.47 per direct labor hour. Compute the total overhead variance. (Round answer to 0 decimal places, e.g. 125.) Total Overhead Variance $

Answer 1

Total overhead variance : $1,742 favorable.

Step-by-step explanation:

Please find the below for detailed explanation and calculation:

We have the Predetermined Overhead applied is equal to Predetermined overhead rate x Standard hours allowed for the work done = 5.47 x 22,450 = $122,801.5;

We have the Actual Overhead incurred is given at $121,060;

Total overhead variance = Predetermined Overhead applied - Actual Overhead incurred = 122,801.5 - 121,060 = $1,741.5. ( favorable variance as actual overhead incurred is less than predetermine overhead applied).

Thus, the answer is $1,742 (Round answer to 0 decimal places).