Gremminger Incorporated makes a single product--a critical part used in commercial airline seats.The company has a standard cost system in which it applies overhead to this product based on the standard labor-hours allowed for the actual output of the period.Data concerning the most recent year appear below: The variable overhead rate variance is:
A)$19,404 F
B)$17,952 F
C)$19,404 U
D)$17,952 U

Question

Gremminger Incorporated makes a single product--a critical part used in commercial airline seats.The company has a standard cost system in which it applies overhead to this product based on the standard labor-hours allowed for the actual output of the period.Data concerning the most recent year appear below:  The variable overhead rate variance is:
A)$19,404 F 
B)$17,952 F 
C)$19,404 U 
D)$17,952 U

Quizplus · Accepted Answer

Variable component of the predetermined overhead rate (SR)= $70,350/35,000 labor-hours
= $2.01 per labor-hour
Variable overhead rate variance = (AH × AR)- (AH × SR)
= ($72,624)- (27,200 labor-hours × $2.01 per labor-hour)
= ($72,624)- ($54,672)
= $17,952 U

Gremminger Incorporated Makes a Single Product--A Critical Part Used in Commercial