The management of Alpha Company has calculated the following variances: Calculate the total variable overhead variance of Alpha Company.
A)$3,000 F
B)$10,050 F
C)$7,000 F
D)$3,050 F

Question

The management of Alpha Company has calculated the following variances:  Calculate the total variable overhead variance of Alpha Company.
A)$3,000 F 
B)$10,050 F 
C)$7,000 F 
D)$3,050 F

Quizplus · Accepted Answer

Total Variable Overhead Variance = Actual Variable Overhead - Applied Variable Overhead
Total Variable Overhead Variance = (Actual Variable Overhead Rate x Actual Hours) - (Applied Variable Overhead Rate x Actual Hours)
Total Variable Overhead Variance = ($10.50 x 6,000) - ($9.00 x 6,000)
Total Variable Overhead Variance = $63,000 - $56,000
Total Variable Overhead Variance = $7,000 F

Therefore, the correct answer is C, with a total variable overhead variance of $7,000 F.

The Management of Alpha Company Has Calculated the Following Variances