The management of Lawnshark Lawnmowers has calculated the following variances: $$\begin{array} { | l | r | }
\hline \text { Direct materials cost variance } & \$ 8000 \mathrm { U } \
\hline \text { Direct materials efficiency variance } & 40,000 \mathrm {~F} \
\hline \text { Direct labor cost variance } & 17,000 \mathrm {~F} \
\hline \text { Direct labor efficiency variance } & 13,000 \mathrm { U } \
\hline \text { Variable overhead cost variance } & 3000 \mathrm {~F} \
\hline \text { Variable overhead efficiency variance } & 5500 \mathrm {~F} \
\hline \text { Fixed overhead cost variance } & 4000 \mathrm {~F} \
\hline
\end{array}$$ What is the total variable overhead variance of the company?

Question

The management of Lawnshark Lawnmowers has calculated the following variances: $$\begin{array} { | l | r | } 
\hline \text { Direct materials cost variance } & \$ 8000 \mathrm { U } \
\hline \text { Direct materials efficiency variance } & 40,000 \mathrm {~F} \
\hline \text { Direct labor cost variance } & 17,000 \mathrm {~F} \
\hline \text { Direct labor efficiency variance } & 13,000 \mathrm { U } \
\hline \text { Variable overhead cost variance } & 3000 \mathrm {~F} \
\hline \text { Variable overhead efficiency variance } & 5500 \mathrm {~F} \
\hline \text { Fixed overhead cost variance } & 4000 \mathrm {~F} \
\hline
\end{array}$$ What is the total variable overhead variance of the company?

Quizplus · Accepted Answer

The given variances are Direct material variance: $5,000 U, Direct labour variance: $8,000 F and Variable overhead variance: $1,500 U. To calculate the total variable overhead variance we need to add the actual variable overhead costs to the variable overhead variance. As the given variance is unfavorable, we need to deduct it from the actual cost to get the total variable overhead variance. 
Actual variable overhead cost - Variable overhead variance = Total variable overhead variance 
Substituting, we get: 
Total variable overhead variance = $40,000 - $1,500 = $38,500 F 
Therefore, option C is the correct answer as it is closest to the calculated value.

The Management of Lawnshark Lawnmowers Has Calculated the Following Variances