Question

The following information relating to a company's overhead costs is available. Actual total variable overhead $ 75,000 Actual total fixed overhead $ 14,000 Budgeted variable overhead rate per machine hour $ 2.50 Budgeted total fixed overhead $ 15,000 Budgeted machine hours allowed for actual output 32,000 Based on this information, the total variable overhead variance is:

Answer 1

$5,000 favorable

Step-by-step explanation:

The computation of the total variable overhead variance is given below:

= Budgeted machine hours allowed for actual output × Budgeted variable overhead rate per machine hour - Actual total variable overhead

= 32,000 hours × $2.50 - $75,000

= $80,000 - $75,000

= $5,000 favorable

Since the favorable is more than the actual so it should be favorable