The following standards for variable manufacturing overhead have been establishe
ID: 2494061 • Letter: T
Question
The following standards for variable manufacturing overhead have been established for a company that makes only one product:
Standard hours per unit of output
3.40
hours
Standard variable overhead rate
$10.75
per hour
The following data pertain to operations for the last month:
Actual hours
9,200
hours
Actual total labor cost
$95,800
Actual output
2,500
units
What is the variable overhead rate variance for the month? (Do not round intermediate calculations.)
$3,100 U
$3,381 F
$3,100 F
$3,381 U
Standard hours per unit of output
3.40
hours
Standard variable overhead rate
$10.75
per hour
Explanation / Answer
AH = ACTUAL HOUR = 9200 HOUR
AR = ACTUAL RATE = $95800 / 9200 = 10.4130
SR = STANDARD RATE = $10.75
VARIABLE OVERHEAD RATE VARIANCE = (AH * AR) - (AH * SR)
= (9200 * $10.4130) - (9200 * $10.75)
= $95800 - $98900
A = $3100 U