Question

Viger Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company has provided the following data for the most recent month: Budgeted level of activity 8,400 MHs Actual level of activity 8,600 MHs Standard variable manufacturing overhead rate $ 7.10 per MH Actual total variable manufacturing overhead $ 58,650 What was the variable overhead rate variance for the month

Answer 1

$2,410 Favorable

Step-by-step explanation:

The computation of variable overhead rate variance is shown below:-

Actual hours (Actual rate - Standard rate) = Actual Hour × Actual rate - Actual Hour × Standard rate

= $58,650 - (8,600 × $7.10)

= $58,650 - $61,060

= $2,410 Favorable

Therefore, for computing the variable overhead rate variance we simply applied the above formula.