A manufacturing company that has only one product has established the following standards for its variable manufacturing overhead. The company bases its variable manufacturing overhead standards on direct labor-hours. The following data pertain to operations for the last month:
What is the variable overhead rate variance for the month?
A) $10,821 U
B) $255 U
C) $10,821 F
D) $255 F

Question

A manufacturing company that has only one product has established the following standards for its variable manufacturing overhead. The company bases its variable manufacturing overhead standards on direct labor-hours.  The following data pertain to operations for the last month:
 What is the variable overhead rate variance for the month?
A) $10,821 U 
B) $255 U 
C) $10,821 F 
D) $255 F

Quizplus · Accepted Answer

AH × AR = $72,165
Variable overhead rate variance = (AH × AR) − (AH × SR)
= ($72,165) − (5,100 hours × $14.20 per hour)
= $72,165 − $72,420
= $255 F

A Manufacturing Company That Has Only One Product Has Established