A manufacturing company that has only one product has established the following standards for its variable manufacturing overhead. The company bases its variable manufacturing overhead standards on machine-hours. The following data pertain to operations for the last month:
-What is the variable overhead rate variance for the month?
A)$1,220 U
B)$5,885 F
C)$1,220 F
D)$5,885 U

Question

A manufacturing company that has only one product has established the following standards for its variable manufacturing overhead. The company bases its variable manufacturing overhead standards on machine-hours.  The following data pertain to operations for the last month: 
-What is the variable overhead rate variance for the month?
A)$1,220 U 
B)$5,885 F 
C)$1,220 F 
D)$5,885 U

Quizplus · Accepted Answer

Variable overhead rate variance = (AH F1F1F1S1F1F1F10 AR)- (AH F1F1F1S1F1F1F10 SR)
= $73,505 - (6,100 machine-hours F1F1F1S1F1F1F10 $12.25 per machine-hour)
= $73,505 - $74,725 = $1,220 F

A Manufacturing Company That Has Only One Product Has Established