Total Variable Overhead Variance Aretha Company showed the following information
ID: 2545748 • Letter: T
Question
Total Variable Overhead Variance Aretha Company showed the following information for the year: Standard variable overhead rate (SVOR) per direct labor hour Standard hours (SH) allowed per unit Actual production in units Actual variable overhead costs Actual direct labor hours Required: 1. Calculate the standard direct labor hours for actual production. $3.70 4 14,000 $206,816 56,200 hours 2. Calculate the applied variable overhead. 3. Calculate the total variable overhead variance. Favorable Unfavorable No varianceExplanation / Answer
1.
Standard direct labor hours for actual production
= Standard hours allowed per unit x Actual production in units
= 4 x 14,000
= 56,000
2.
Applied variable overhead
= Standard variable overhead rate x Actual direct labor hours
= $3.70 x 56,200
= $207,940
3.
Total variable overhead variance
= Actual variable overhead - Applied variable overhead
= $206,816 - $207,940
= $1,124 Favorable