Jupiter Co.applies overhead based on direct labor hours.The variable overhead standard is 4 hours at $12 per hour.During February,Jupiter Co.spent $113,400 for variable overhead.9,150 labor hours were used to produce 2,400 units.What is the variable overhead rate variance?
A)$3,600 unfavorable
B)$3,600 favorable
C)$5,400 favorable
D)$1,800 favorable

Question

Quizplus · Accepted Answer

The variable overhead rate variance is calculated as (Actual Hours x Actual Rate) - (Actual Hours x Standard Rate). The standard rate is $12, and the actual rate is $113,400 / 9,150 hours = $12.40. The variance is (9,150 x $12.40) - (9,150 x $12) = $3,600 unfavorable.