A company had the following information pertaining to two different cases: The total overhead variance in Case Y was
A) $4,000 unfavourable.
B) $4,000 favourable.
C) $10,000 unfavourable.
D) $12,000 favourable.
E) $12,000 unfavourable.

Question

A company had the following information pertaining to two different cases:  The total overhead variance in Case Y was
A) $4,000 unfavourable. 
B) $4,000 favourable. 
C) $10,000 unfavourable. 
D) $12,000 favourable. 
E) $12,000 unfavourable.

Quizplus · Accepted Answer

The letter "TB" in the code suggests that the case is using Time-Based Overhead Rate. The last two digits "22" indicates that the standard overhead rate is $22 per unit of the allocation base. Using this information, we can calculate the standard overhead cost for Case Y as follows:

Standard overhead cost = ($22/unit) x 4,000 units = $88,000

The total overhead cost incurred in Case Y is given as $100,000. Hence, the total overhead variance is:

Total overhead variance = Actual overhead cost - Standard overhead cost
= $100,000 - $88,000
= $12,000 unfavourable

Therefore, the best choice is E, $12,000 unfavourable.

A Company Had the Following Information Pertaining to Two Different