(Appendix 11A)Pohl Corporation uses a standard cost system in which manufacturing overhead is applied on the basis of standard machine-hours.For June, the company's manufacturing overhead flexible budget showed the following total budgeted costs at a denominator activity level of 20, 000 machine-hours: During June, 17, 000 machine-hours were used to complete 13, 000 units of product, and the following actual total overhead costs were incurred: At standard, each unit of finished product requires 1.4 hours of machine time. The variable overhead rate variance for maintenance cost for June was:
A)$1, 020 F
B)$1, 020 U
C)$3, 230 F
D)$3, 230 U

Question

(Appendix 11A)Pohl Corporation uses a standard cost system in which manufacturing overhead is applied on the basis of standard machine-hours.For June, the company's manufacturing overhead flexible budget showed the following total budgeted costs at a denominator activity level of 20, 000 machine-hours:  During June, 17, 000 machine-hours were used to complete 13, 000 units of product, and the following actual total overhead costs were incurred:  At standard, each unit of finished product requires 1.4 hours of machine time. The variable overhead rate variance for maintenance cost for June was:
A)$1, 020 F 
B)$1, 020 U 
C)$3, 230 F 
D)$3, 230 U

Quizplus · Accepted Answer

SR = $16, 000 ÷ 20, 000 machine-hours = $0.80 per machine-hour
Variable overhead rate variance = (AH × AR)- (AH × SR)
= $14, 620 - (17, 000 machine-hours × $0.80 per machine-hour)
= $14, 620 - $13, 600
= $1, 020 U

(Appendix 11A)Pohl Corporation Uses a Standard Cost System in Which