Omary Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs).The company has provided the following data for the most recent month: What was the total of the variable overhead rate and fixed manufacturing overhead budget variances for the month?
A)$1,520 Unfavorable
B)$3,180 Favorable
C)$4,820 Unfavorable
D)$6,340 Unfavorable

Question

Omary Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs).The company has provided the following data for the most recent month:  What was the total of the variable overhead rate and fixed manufacturing overhead budget variances for the month?
A)$1,520 Unfavorable 
B)$3,180 Favorable 
C)$4,820 Unfavorable 
D)$6,340 Unfavorable

Quizplus · Accepted Answer

Budget variance = Actual fixed overhead - Budgeted fixed overhead cost
= $54,000 - $50,000
= $4,000 U
Variable overhead rate variance = (AH × AR)- (AH × SR)
= $31,980 - (4,100 MHs × $7.60 per MH)
= $31,980 - $31,160
= $820 U
Total variance = $4,000 U + $820 U = $4,820 U

Omary Corporation Has a Standard Cost System in Which It