The following standards for variable manufacturing overhead have been established for a company that makes only one product: The following data pertain to operations for the last month:
What is the variable overhead rate variance for the month?
A) $3,010 Favorable
B) $3,010 Unfavorable
C) $10,435 Unfavorable
D) $10,435 Favorable

Question

The following standards for variable manufacturing overhead have been established for a company that makes only one product:  The following data pertain to operations for the last month:
 What is the variable overhead rate variance for the month?
A) $3,010 Favorable 
B) $3,010 Unfavorable 
C) $10,435 Unfavorable 
D) $10,435 Favorable

Quizplus · Accepted Answer

The calculation for the variable overhead rate variance is as follows:

Actual Hours Worked x (Actual Variable Overhead Rate - Standard Variable Overhead Rate)

Using the data given in the problem, we have:

Actual Hours Worked = 5,900
Actual Variable Overhead Rate = $1.90
Standard Variable Overhead Rate = $2.00

Therefore,

Variable Overhead Rate Variance = 5,900 x ($1.90 - $2.00) = $3,010 Unfavorable

Therefore, the correct choice is B.

The Following Standards for Variable Manufacturing Overhead Have Been Established