The following standards for variable manufacturing overhead have been established for a company that makes only one product: The following data pertain to operations for the last month:
What is the variable overhead rate variance for the month?

A) $3,010 Favorable
B) $3,010 Unfavorable
C) $10,435 Unfavorable
D) $10,435 Favorable

Question

The following standards for variable manufacturing overhead have been established for a company that makes only one product:

The following data pertain to operations for the last month:
The following standards for variable manufacturing overhead have been established for a company that makes only one product: The following data pertain to operations for the last month: What is the variable overhead rate variance for the month? A) $3,010 Favorable B) $3,010 Unfavorable C) $10,435 Unfavorable D) $10,435 Favorable

What is the variable overhead rate variance for the month?

A) $3,010 Favorable
B) $3,010 Unfavorable
C) $10,435 Unfavorable
D) $10,435 Favorable

Upasna Chatterjee · Accepted Answer

Final Answer : B, Explanation :  The calculation for the variable overhead rate variance is as follows:Actual Hours Worked x (Actual Variable Overhead Rate - Standard Variable Overhead Rate)Using the data given in the problem, we have:Actual Hours Worked = 5,900Actual Variable Overhead Rate = $1.90Standard Variable Overhead Rate = $2.00Therefore,Variable Overhead Rate Variance = 5,900 x ($1.90 - $2.00) = $3,010 UnfavorableTherefore, the correct choice is B.

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