Irving Corporation makes a product with the following standards for direct labor and variable overhead: In November the company's budgeted production was 5,300 units, but the actual production was 5,100 units. The company used 1,650 direct labor-hours to produce this output. The actual variable overhead cost was $7,590. The company applies variable overhead on the basis of direct labor-hours.
The variable overhead rate variance for November is:
A) $612 U
B) $660 U
C) $660 F
D) $612 F

Question

Irving Corporation makes a product with the following standards for direct labor and variable overhead:  In November the company's budgeted production was 5,300 units, but the actual production was 5,100 units. The company used 1,650 direct labor-hours to produce this output. The actual variable overhead cost was $7,590. The company applies variable overhead on the basis of direct labor-hours.
The variable overhead rate variance for November is:
A) $612 U 
B) $660 U 
C) $660 F 
D) $612 F

Quizplus · Accepted Answer

AH × AR = $7,590
Variable overhead rate variance = (AH × AR) − (AH × SR)
= ($7,590) − (1,650 hours × $5.00 per hour)
= $7,590 − $8,250
= $660 F

Irving Corporation Makes a Product with the Following Standards for Direct