Alapai Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company has provided the following data for the most recent month: What was the total of the variable overhead rate and fixed manufacturing overhead budget variances for the month?
A) $3,720 Favorable
B) $2,280 Unfavorable
C) $1,840 Favorable
D) $1,880 Unfavorable

Question

Alapai Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company has provided the following data for the most recent month:  What was the total of the variable overhead rate and fixed manufacturing overhead budget variances for the month?
A) $3,720 Favorable 
B) $2,280 Unfavorable 
C) $1,840 Favorable 
D) $1,880 Unfavorable

Quizplus · Accepted Answer

Budget variance = Actual fixed overhead − Budgeted fixed overhead cost
= $37,000 − $40,000
= $3,000 F
Variable overhead rate variance = (AH × AR) − (AH × SR)
= $66,960 − (7,200 MHs × $9.40 per MH)
= $66,960 − $67,680
= $720 F
Total variance = $3,000 F + $720 F = $3,720 F

Alapai Corporation Has a Standard Cost System in Which It