Austin Brands Company uses standard costs for its manufacturing division.Standards specify 0.1 direct labor hours per unit of product.At the beginning of the year,the static budget for variable overhead costs included the following data:

At the end of the year,actual data were as follows:

What is the variable overhead cost variance? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar. )

Question

Austin Brands Company uses standard costs for its manufacturing division.Standards specify 0.1 direct labor hours per unit of product.At the beginning of the year,the static budget for variable overhead costs included the following data:

At the end of the year,actual data were as follows:

What is the variable overhead cost variance? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar. )

Quizplus · Accepted Answer

C)Variable overhead cost variance = (Actual cost - Standard cost)× Actual quantity
Standard cost per direct labor hour = Budgeted variable overhead costs / Budgeted direct labor hours = $14,000 / 630 direct labor hours = $22.22 per direct labor hour
Actual cost per direct labor hour = Actual variable overhead costs / Actual direct labor hours = $15,000 / 480 direct labor hours = $31.25 per direct labor hour
Variable overhead cost variance = ($31.25 - $22.22)× 480 units = $4,334 Unfavorable

Austin Brands Company Uses Standard Costs for Its Manufacturing Division