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) None of the other answers are correct.

Question

Quizplus · Accepted Answer

Variable-overhead efficiency variance = Actual machine hours used – (Actual production × Standard machine hours per unit)
$9,000U = AH – (19,500 × 3)
AH = 58,500 hours

Variable-overhead spending variance = Actual variable overhead – (Actual machine hours used × Standard variable overhead rate)
$21,000F = AVH – (58,500 × $5)
AVH = $280,500

Luke, Inc Has a Standard Variable Overhead Rate of $5 Per