Asked by DARIN FILMS on Jul 28, 2024

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Dubberly Corporation's cost formula for its manufacturing overhead is $30,600 per month plus $64 per machine-hour. For the month of March, the company planned for activity of 7,900 machine-hours, but the actual level of activity was 7,880 machine-hours. The actual manufacturing overhead for the month was $558,610.The activity variance for manufacturing overhead in March would be closest to:

A) $22,410 U
B) $22,410 F
C) $1,280 F
D) $1,280 U

Activity Variance

The difference between the budgeted amount of activity and the actual amount of activity.

Manufacturing Overhead

All manufacturing costs that are not direct materials or direct labor, including expenses such as rent, utilities, and equipment depreciation.

Cost Formula

An equation used to calculate the total costs involved in the production of goods or services, incorporating both fixed and variable components.

  • Gain expertise in discerning and tallying activity variances.
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Verified Answer

AM
Abhay MittalJul 30, 2024
Final Answer :
C
Explanation :
The activity variance formula is:

Activity Variance = (Actual Activity - Planned Activity) x Variable Overhead Rate

Plugging in the values, we get:

Activity Variance = (7,880 - 7,900) x $64 = -$1,280

Since the actual activity was less than planned, the variance is unfavorable (F). Therefore, the correct answer is C) $1,280 F.