Messenger, Inc.has a standard variable overhead rate of $5 per machine hour, with each completed unit expected to take three machine hours to produce.A review of the company's accounting records found the following: Actual production: 19,500 units Variable-overhead eﬃciency variance: $9,000U Variable-overhead spending variance: $21,000F What was Messenger's actual variable overhead during the period?
A)$262,500.
B)$280,500.
C)$304,500.
D)$322,500.
E)None of the answers is correct.

Question

Quizplus · Accepted Answer

The actual variable overhead is calculated by adjusting the standard cost for the variances: Standard cost = 19,500 units * 3 hours/unit * $5/hour = $292,500. Adjust for variances: $292,500 - $21,000 (favorable spending variance) + $9,000 (unfavorable efficiency variance) = $280,500.