The Montgomery Corporation has a standand costing system in which variable o pro
ID: 2562651 • Letter: T
Question
The Montgomery Corporation has a standand costing system in which variable o production on the basis of standard manufacturing overhead is assigned 3,000 hours 3,420 Unfavorable machine-hours The following data are available for September production$22,620 Standard machine-hours allowed for September Actual variable manufacturing overhead cost incurred Variable overhcad rate variance Total variable overhead spending variance $4,620 Unfavorable 12 Actual machine-hours worked during September is 3,000 hours 3,200 hours 3,300 hours 3,770 hours E None of the aboveExplanation / Answer
Solution
Total Variable overhead spending variance = $4620 Unfavorable
Variable Overhead Rate Variance = $3420 Unfavorable
It means, Variable Overhead Efficiency Variance = $4620 - $3420 = $1200
Variable Overhead Rate Variance = Actual Hours * (Actual Rate - Standard Rate)
$3420 = Acutal Hours * Actual Rate - Actual Hours * Standard Rate
$3420 = Actual Variable overhed Cost - Actual Hours * Standard Rate
$3420 = $22620 - Actual Hours * Standard Rate
Actual Hours * Standard Rate = $19200
Variable Overhead Efficiency Variance = Standard Rate * (Actual Hours - Standard Hours)
$1200 = Standard Rate * Actual Hours - Standard Rate * Standard Hours
$1200 = $19200 - 3000 * Standard Rate
Standard Rate = $6
Actual Hours * Standard Rate = 19200
Actual Hours * 6 = 19200
Actual Hours = 3200 Hours
Therefore actual machine hours worked during september is 3200 hours.