Asked by YUEYING HUANG on Apr 27, 2024
Verified
The variable overhead rate variance for the month is closest to:
A) $1,080 U
B) $1,080 F
C) $1,148 U
D) $1,148 F
Variable Overhead Rate Variance
The difference between the actual variable overhead incurred and the expected (or budgeted) variable overhead based on a standard rate.
- Acquire knowledge on the calculation and concept of variable overhead rate along with efficiency variances.
Verified Answer
PS
Priyanshu SinghMay 02, 2024
Final Answer :
A
Explanation :
Variable overhead rate variance = (AH × AR)− (AH × SR)
= AH × (AR - SR)
= 2,700 hours × ($5.90 per hour - $5.50 per hour)
= 2,700 hours × ($0.40 per hour)
= $1,080 U
or
Variable overhead rate variance = (AH × AR)− (AH × SR)
= $15,930 − (2,700 hours × $5.50 per hour)
= $15,930 − ($14,850)
= $1,080 U
= AH × (AR - SR)
= 2,700 hours × ($5.90 per hour - $5.50 per hour)
= 2,700 hours × ($0.40 per hour)
= $1,080 U
or
Variable overhead rate variance = (AH × AR)− (AH × SR)
= $15,930 − (2,700 hours × $5.50 per hour)
= $15,930 − ($14,850)
= $1,080 U
Learning Objectives
- Acquire knowledge on the calculation and concept of variable overhead rate along with efficiency variances.