Question

A manufacturing company that has only one product has established the following standards for its variable manufacturing overhead. The company bases its variable manufacturing overhead standards on direct labor-hours.

Standard hours per unit of output 3.80 machine hours
Standard variable overhead rate $11.15 per machine hour

The following data pertain to operations for the last month:
Actual hours 8700 machine hours
Actual variable manufacturing overhead cost $95840
Actual output 2100 units

What is the variable overhead rate variance for the month?

A.) 1446F

B.) 1446U

C.) 1165F

D.) 1165U

Answer 1

The correct answer is C.

Step-by-step explanation:

Giving the following information:

Standard variable overhead rate $11.15 per machine hour

The following data pertain to operations for the last month:

Actual hours 8700 machine hours

Actual variable manufacturing overhead cost $95840

To calculate the variable overhead rate variance, we need to use the following formula:

Manufacturing overhead rate variance= (standard rate - actual rate)* actual quantity

Manufacturing overhead rate variance= (11.15 - 95,840/8,700)*8,700= $1,165 favorable