The following data have been provided by Petri Corporation:

Indirect labor and power are both elements of variable manufacturing overhead.

-The variable overhead rate variance for indirect labor is closest to:
A)$1,725 F
B)$3,590 F
C)$3,590 U
D)$5,315 F

Question

The following data have been provided by Petri Corporation:

Indirect labor and power are both elements of variable manufacturing overhead.

-The variable overhead rate variance for indirect labor is closest to:
A)$1,725 F 
B)$3,590 F 
C)$3,590 U 
D)$5,315 F

Quizplus · Accepted Answer

The variable overhead rate variance for indirect labor is calculated as follows:

Actual Indirect Labor Hours Worked x (Actual Variable Overhead Rate - Standard Variable Overhead Rate)

From the given data,
Actual Indirect Labor Hours Worked = 4,400
Actual Variable Overhead Rate = ($49,900 ÷ 4,400 hours) = $11.34 per hour
Standard Variable Overhead Rate = $10 per hour

Therefore, the variable overhead rate variance for indirect labor is:

4,400 x ($11.34 - $10) = $3,590 F

So, the best choice is B, which represents the same amount as the calculated variance.

The Following Data Have Been Provided by Petri Corporation