Luke,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 Luke's actual variable overhead during the period?
A)$262,500.
B)$280,500.
C)$304,500.
D)$322,500.
E)Some other amount.

Question

Quizplus · Accepted Answer

Variable-overhead efficiency variance = Actual hours used - Standard hours allowed
$9,000U = Actual hours used - (19,500 x 3)
Actual hours used = 58,500 + 9,000 = 67,500

Variable-overhead spending variance = Actual overhead - (Standard overhead rate x Actual hours used)
$21,000F = Actual overhead - ($5 x 67,500)
Actual overhead = $280,500

Luke,IncHas a Standard Variable Overhead Rate of $5 Per Machine