Bulluck Corporation makes a product with the following standard costs:
The company reported the following results concerning this product in July.
The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
-The variable overhead rate variance for October is:
A) $1,400 Favorable
B) $1,900 Unfavorable
C) $3,750 Favorable
D) $4,375 Unfavorable

Question

Bulluck Corporation makes a product with the following standard costs:
  The company reported the following results concerning this product in July.
  The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
-The variable overhead rate variance for October is:
A) $1,400 Favorable 
B) $1,900 Unfavorable 
C) $3,750 Favorable 
D) $4,375 Unfavorable

Quizplus · Accepted Answer

AH × AR = $18,200
Variable overhead rate variance = (AH × AR) − (AH × SR)
= ($18,200) − (5,600 hours × $3.50 per hour)
= $18,200 − $19,600
= $1,400 F

Bulluck Corporation Makes a Product with the Following Standard Costs