(Appendix 11A)Cuda Manufacturing Corporation uses a standard cost system with machine-hours (MHs)as the activity base for overhead.The following information relates to Cuda's operations last year: What was Cuda's variable overhead rate variance?
A)$6, 000 Unfavorable
B)$15, 000 Favorable
C)$20, 000 Unfavorable
D)$21, 000 Favorable

Question

(Appendix 11A)Cuda Manufacturing Corporation uses a standard cost system with machine-hours (MHs)as the activity base for overhead.The following information relates to Cuda's operations last year:  What was Cuda's variable overhead rate variance?
A)$6, 000 Unfavorable 
B)$15, 000 Favorable 
C)$20, 000 Unfavorable 
D)$21, 000 Favorable

Quizplus · Accepted Answer

AH × AR = $370, 000
Variable overhead rate variance = (AH × AR)- (AH × SR)
= ($370, 000)- (52, 000 MHs × $7 per MH)
= $370, 000 - $364, 000
= $6, 000 U

(Appendix 11A)Cuda Manufacturing Corporation Uses a Standard Cost System with Machine-Hours