Asked by Alyssa Currie on Jun 11, 2024
Verified
The variable overhead rate variance is:
A) $1,000 Favorable
B) $1,000 Unfavorable
C) $3,500 Unfavorable
D) $3,500 Favorable
Variable Overhead Rate Variance
The difference between the actual variable overhead costs and the expected costs based on the standard variable overhead rate.
- Acquire knowledge and perform calculations to ascertain variable overhead efficiency discrepancies.
Verified Answer
KB
K'Sia ByassJun 17, 2024
Final Answer :
D
Explanation :
AH × AR = $70,000
Total variable overhead spending variance = (AH × AR)- (SH × SR)
$4,550 F = $70,000 - (3,550 setups × SR)
-$4,550 = $70,000 - (3,550 setups × SR)
3,550 setups × SR = $70,000 + $4,550
3,550 setups × SR = $74,550
SR = $74,550 ÷ 3,550 setups
SR = $21 per setup
Variable overhead rate variance = (AH × AR)? (AH × SR)
= ($70,000)? (3,500 setups × $21 per setup)
= $70,000 ? $73,500
= $3,500 F
Reference: CH09-Ref79
The Maxit Corporation has a standard costing system in which variable manufacturing overhead is assigned to production on the basis of standard machine-hours.The following data are available for July:
• Actual variable manufacturing overhead cost incurred: $11,310
• Actual machine-hours worked: 1,600 hours
• Variable overhead rate variance: $1,710 U
• Total variable overhead spending variance: $2,310 U
Total variable overhead spending variance = (AH × AR)- (SH × SR)
$4,550 F = $70,000 - (3,550 setups × SR)
-$4,550 = $70,000 - (3,550 setups × SR)
3,550 setups × SR = $70,000 + $4,550
3,550 setups × SR = $74,550
SR = $74,550 ÷ 3,550 setups
SR = $21 per setup
Variable overhead rate variance = (AH × AR)? (AH × SR)
= ($70,000)? (3,500 setups × $21 per setup)
= $70,000 ? $73,500
= $3,500 F
Reference: CH09-Ref79
The Maxit Corporation has a standard costing system in which variable manufacturing overhead is assigned to production on the basis of standard machine-hours.The following data are available for July:
• Actual variable manufacturing overhead cost incurred: $11,310
• Actual machine-hours worked: 1,600 hours
• Variable overhead rate variance: $1,710 U
• Total variable overhead spending variance: $2,310 U
Learning Objectives
- Acquire knowledge and perform calculations to ascertain variable overhead efficiency discrepancies.
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