The Chesterfield Company uses standard costing. Overhead is applied at $12 per m
ID: 2374604 • Letter: T
Question
The Chesterfield Company uses standard costing. Overhead is applied at $12 per machine hour. Data for the month of March follows:
%u2022
Actual overhead costs
$194,000
%u2022
Standard machine hours allowed for actual production
16,500
%u2022
Actual machine hours used
17,400
%u2022
Flexible budget overhead for standard hours allowed
208,800
The overhead volume variance is:
%u2022
Actual overhead costs
$194,000
%u2022
Standard machine hours allowed for actual production
16,500
%u2022
Actual machine hours used
17,400
%u2022
Flexible budget overhead for standard hours allowed
208,800
Explanation / Answer
overhead variance is budgeted overhead - standard hours * standard rate = 208800 - 16500 * 12 = 10,800