The following data have been provided by Mathews Corporation: Lubricants and supplies are both elements of variable manufacturing overhead. The variable overhead rate variance for supplies is closest to:
A)$430 U
B)$736 F
C)$306 U
D)$736 U

Question

The following data have been provided by Mathews Corporation:  Lubricants and supplies are both elements of variable manufacturing overhead. The variable overhead rate variance for supplies is closest to:
A)$430 U 
B)$736 F 
C)$306 U 
D)$736 U

Quizplus · Accepted Answer

We can use the formula for variable overhead rate variance:

VORV = (Actual Variable Overhead Rate - Budgeted Variable Overhead Rate) x Actual Activity

Let's find the actual variable overhead rate for supplies:
Actual Variable Overhead Rate for Supplies = Actual Variable Overhead Cost / Actual Quantity of Supplies Used
= $13,800 / 4600 units
= $3.00 per unit

The budgeted variable overhead rate for supplies is given as $3.10 per unit.

Using the formula for VORV, we get:

VORV for Supplies = ($3.00 - $3.10) x 4600
= -$460 U

Therefore, the closest option is C) $306 U.

The Following Data Have Been Provided by Mathews Corporation