Asked by Allyssa Wilson on May 08, 2024
Verified
The following standards for variable overhead have been established for a company that makes only one product:
The following data pertain to operations for the last month:
Required: a. What is the variable overhead rate variance for the month?b. What is the variable overhead efficiency variance for the month?
Variable Overhead Rate
The ratio of variable overhead costs to a related activity driver, often used in cost accounting.
Overhead Efficiency
A measurement of how effectively a company uses its overhead costs in generating revenue.
- Quantify the variable overhead rate and identify efficiency discrepancies.
- Scrutinize favorable and unfavorable variances to discern their outcomes.
Verified Answer
HJ
Haylee JohnsonMay 10, 2024
Final Answer :
a.Variable overhead rate variance = (Actual hours × Actual rate) − (Actual hours × Standard rate)= $80,000 − (5,000 hours × $16.05 per hour)= $80,000 − ($80,250)= $250 Favorableb.Standard Hours = Standard hours per unit × Actual output= 3.6 hours per unit × 1,300 units= 4,680 hoursVariable overhead efficiency variance = (Actual hours − Standard hours) × Standard rate= (5,000 hours − 4,680 hours) × $16.05 per hour= (320 hours) × $16.05 per hour = $5,136 Unfavorable
Learning Objectives
- Quantify the variable overhead rate and identify efficiency discrepancies.
- Scrutinize favorable and unfavorable variances to discern their outcomes.
Related questions
Glaab Incorporated Has Provided the Following Data Concerning One of ...
Bondi Corporation Makes Automotive Engines ...
Boldrin Incorporated Has a Standard Cost System ...
Kropf Incorporated Has Provided the Following Data Concerning One of ...
Creger Corporation, Which Makes Landing Gears, Has Provided the Following ...