Millworth and Moorhead Limited incurs variable production overheads.The company's budget for February 20X4 included 2360 units of sales and production.Variable overheads were recovered at a rate of £5.60 per unit. The actual sales and production in units for the month was 2333, and the actual figure for variable overheads incurred was £12 257.
What was the variable production overhead variance for February 20X4?

Question

Quizplus · Accepted Answer

To calculate the variable production overhead variance, we need to use the formula:

Variable production overhead variance = (Standard variable overhead rate x Standard production - Actual variable overheads)

Standard variable overhead rate is given as £5.60 per unit, and the standard production is 2360 units.

Substituting the values in the formula, we get:

Variable production overhead variance = (5.60 x 2360 - 12,257)
= £807.80 (F)

Therefore, the variable production overhead variance for February 20X4 was £807.80 (F). Option C is correct.

Millworth and Moorhead Limited Incurs Variable Production Overheads