The Holland Company uses a predetermined overhead rate of $12 per direct labour hour to apply overhead.During the year,30,000 direct labour hours were worked.Actual overhead costs for the year were $320,000.What is the overhead variance?
A)$36,000 underapplied
B)$36,000 overapplied
C)$40,000 underapplied
D)$40,000 overapplied

Question

Quizplus · Accepted Answer

The predetermined overhead rate is $12 per direct labor hour, and 30,000 hours were worked, so the applied overhead is 30,000 hours * $12/hour = $360,000. The actual overhead costs were $320,000, so the variance is $360,000 (applied) - $320,000 (actual) = $40,000 overapplied.

The Holland Company Uses a Predetermined Overhead Rate of $12