(Appendix 11A)Nitrol Corporation manufactures brass vases using a standard cost system with standard machine-hours as the activity base for overhead.The following information relates to vase production at Nitrol for last year: The standard machine-hours per vase is 1.25.Last year Nitrol produced 84, 000 vases. What was Nitrol's variable overhead rate variance for last year?
A)$1, 000 Favorable
B)$1, 060 Unfavorable
C)$2, 060 Unfavorable
D)$9, 500 Unfavorable

Question

(Appendix 11A)Nitrol Corporation manufactures brass vases using a standard cost system with standard machine-hours as the activity base for overhead.The following information relates to vase production at Nitrol for last year:  The standard machine-hours per vase is 1.25.Last year Nitrol produced 84, 000 vases. What was Nitrol's variable overhead rate variance for last year?
A)$1, 000 Favorable 
B)$1, 060 Unfavorable 
C)$2, 060 Unfavorable 
D)$9, 500 Unfavorable

Quizplus · Accepted Answer

SR = $50, 000 ÷ 100, 000 hours = $0.50 per hour
AH × AR = $53, 560
Variable overhead rate variance = (AH × AR)- (AH × SR)
= ($53, 560)- (103, 000 hours × $0.50 per hour)
= $53, 560 - $51, 500
= $2, 060 U

(Appendix 11A)Nitrol Corporation Manufactures Brass Vases Using a Standard Cost