Sweet Dreams manufactures candy. Its records revealed the following data: $\begin{array}{ll}
\text {Number of units produced }&\text { 4,000}\
\text {Standard direct labor hours per unit }&\text { 2}\
\text {Standard variable overhead rate }&\text {$ \$ 2.50 $ per hour }\
\text { Standard fixed overhead rate}&\text { $ \$ 5.00 $ per hour}\
\text {Budgeted fixed overhead costs }&\text {\$ 40,800 }\
\text { Actual variable overhead costs}&\text { \$ 16,800 }\
\text {Actual fixed overhead costs }&\text {\$ 40,400 }\
\text {Actual labor hours }&\text { 8,000 direct labor hours}\
\text {Total actual overhead }&\text { \$ 57,200}\
\end{array}$
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The total variable overhead variance is

Question

Sweet Dreams manufactures candy. Its records revealed the following data: $\begin{array}{ll}
\text {Number of units produced }&\text { 4,000}\
\text {Standard direct labor hours per unit }&\text { 2}\
\text {Standard variable overhead rate }&\text {$ \$ 2.50 $ per hour }\
\text { Standard fixed overhead rate}&\text { $ \$ 5.00 $ per hour}\
\text {Budgeted fixed overhead costs }&\text {\$ 40,800  }\
\text { Actual variable overhead costs}&\text { \$ 16,800 }\
\text {Actual fixed overhead costs }&\text {\$ 40,400 }\
\text {Actual labor hours }&\text { 8,000 direct labor hours}\
\text {Total actual overhead }&\text { \$ 57,200}\
\end{array}$
-
 The total variable overhead variance is

Quizplus · Accepted Answer

The total variable overhead variance is calculated as the difference between the actual variable overhead costs and the standard variable overhead costs for the actual hours worked. The standard variable overhead cost for the actual hours (8,000 hours) is $8,000 \times \$2.50 = \$20,000$. The actual variable overhead costs are \$16,800. Therefore, the variance is $ \$20,000 - \$16,800 = \$3,200$, which is favorable (F) because the actual costs are less than the standard costs.

Sweet Dreams Manufactures Candy - the Total Variable Overhead Variance Is A) $3,200

Sweet Dreams Manufactures Candy -
the Total Variable Overhead Variance Is
A) $3,200