(Appendix 11A)Vette Tie Corporation has developed the following manufacturing overhead standards to use in applying overhead to the production of its hand-painted silk ties.Manufacturing overhead at Vette is applied to production on the basis of standard direct labor-hours (DLHs). The above standards were based on an expected annual volume of 60, 000 ties.The actual results for last year were as follows: What was Vette's variable overhead rate variance?
A)$2, 800 Unfavorable
B)$13, 200 Favorable
C)$16, 000 Favorable
D)$68, 000 Unfavorable

Question

(Appendix 11A)Vette Tie Corporation has developed the following manufacturing overhead standards to use in applying overhead to the production of its hand-painted silk ties.Manufacturing overhead at Vette is applied to production on the basis of standard direct labor-hours (DLHs).  The above standards were based on an expected annual volume of 60, 000 ties.The actual results for last year were as follows:  What was Vette's variable overhead rate variance?
A)$2, 800 Unfavorable 
B)$13, 200 Favorable 
C)$16, 000 Favorable 
D)$68, 000 Unfavorable

Quizplus · Accepted Answer

AH × AR = $880, 000
Variable overhead rate variance = (AH × AR)- (AH × SR)
= ($880, 000)- (64, 000 hours × $14.00 per hour)
= $880, 000 - $896, 000
= $16, 000 F

(Appendix 11A)Vette Tie Corporation Has Developed the Following Manufacturing Overhead