At the beginning of the year, Rovetti, Inc. estimated that in the coming year overhead would be $600,000 and direct labour hours would be 200,000. At the end of the year, it had actual overhead of $656,000 and 225,050 direct labour hours.
-Refer to the Figure.What is the overhead variance for Rovetti?
A)$56,000 overapplied
B)$56,000 underapplied
C)$19,150 overapplied
D)$19,150 underapplied

Question

Quizplus · Accepted Answer

The overhead variance is calculated by comparing the applied overhead to the actual overhead. Applied overhead is calculated using the predetermined overhead rate (estimated overhead / estimated direct labor hours) multiplied by actual direct labor hours. The variance is $19,150 underapplied because the applied overhead is less than the actual overhead.

At the Beginning of the Year, Rovetti, Inc