Commodore Company Commodore Company uses a standard cost system for its production process and applies overhead based on direct labor hours.The following information is available for September when Commodore produced 5,000 units:

Standard:

DLH per unit 3.00

Variable overhead per DLH $1.80

Fixed overhead per DLH $3.25

Budgeted variable overhead $27,250

Budgeted fixed overhead $49,500

Actual:

Direct labor hours 16,000

Variable overhead $31,325

Fixed overhead $49,750

Refer to Commodore Company.Using the one-variance approach,what is the total overhead variance? A)$ 275 U B)$ 1,000 U C)$ 4,325 U D)$ 5,325 U

Question

Commodore Company
Commodore Company uses a standard cost system for its production process and applies overhead based on direct labor hours.The following information is available for September when Commodore produced 5,000 units:

Standard:
DLH per unit	3.00
Variable overhead per DLH	$1.80
Fixed overhead per DLH	$3.25
Budgeted variable overhead	$27,250
Budgeted fixed overhead	$49,500

Actual:
Direct labor hours	16,000
Variable overhead	$31,325
Fixed overhead	$49,750

Refer to Commodore Company.Using the one-variance approach,what is the total overhead variance? A)$ 275 U B)$ 1,000 U C)$ 4,325 U D)$ 5,325 U

Quizplus · Accepted Answer

The total overhead variance is calculated as the difference between actual overhead costs and applied overhead costs. The actual overhead is $31,325 (variable) + $49,750 (fixed) = $81,075. The standard overhead rate is ($1.80 + $3.25) per DLH = $5.05 per DLH. For 5,000 units at 3 DLH per unit, the standard DLH is 15,000. Applied overhead is 15,000 DLH * $5.05 = $75,750. The variance is $81,075 - $75,750 = $5,325 unfavorable (U).

Commodore Company Commodore Company Uses a Standard Cost System for Its Production