Showcase Inc.Showcase Inc's standard variable overhead rate is $7 per direct labour hour, and each unit requires three standard direct labour hours. The company recorded 7,000 actual direct labour hours, $65,000 actual variable overhead costs, and 2,950 units of product manufactured.
-Refer to Showcase Inc. What is the total variable overhead variance?
A) $490 U
B) $1,000 U
C) $2,950 U
D) $3,050 U

Question

Quizplus · Accepted Answer

The total variable overhead variance is calculated as the difference between actual variable overhead costs and standard variable overhead costs. Standard variable overhead costs = 2,950 units * 3 hours/unit * $7/hour = $61,950. The variance is $65,000 - $61,950 = $3,050 Unfavorable (U).