(Appendix 10A) Chojnowski Incorporated makes a single product--a cooling coil used in commercial refrigerators. The company has a standard cost system in which it applies overhead to this product based on the standard labor-hours allowed for the actual output of the period. Data concerning the most recent year appear below:

-The variable overhead rate variance is:
A) $14,280 F
B) $13,314 U
C) $14,280 U
D) $13,314 F

Question

(Appendix 10A) Chojnowski Incorporated makes a single product--a cooling coil used in commercial refrigerators. The company has a standard cost system in which it applies overhead to this product based on the standard labor-hours allowed for the actual output of the period. Data concerning the most recent year appear below:
 
-The variable overhead rate variance is:
A) $14,280 F 
B) $13,314 U 
C) $14,280 U 
D) $13,314 F

Quizplus · Accepted Answer

Variable component of the predetermined overhead rate (SR) = $82,450/42,500 labor-hours
= $1.94 per labor-hour
Variable overhead rate variance = (AH × AR) - (AH × SR)
= ($74,812) - (31,700 labor-hours × $1.94 per labor-hour)
= ($74,812) - ($61,498)
= $13,314 U

(Appendix 10A) Chojnowski Incorporated Makes a Single Product--A Cooling Coil