(Appendix 11A)The Dillon Corporation makes and sells a single product.Overhead costs are applied on the basis of standard direct labor-hours.The standard cost card shows that 5 direct labor-hours are required per unit.The Dillon Corporation had the following budgeted and actual data for March: The variable overhead rate variance for March is:
A)$4, 900 U
B)$11, 060 U
C)$14, 700 U
D)$17, 300 U

Question

(Appendix 11A)The Dillon Corporation makes and sells a single product.Overhead costs are applied on the basis of standard direct labor-hours.The standard cost card shows that 5 direct labor-hours are required per unit.The Dillon Corporation had the following budgeted and actual data for March:  The variable overhead rate variance for March is:
A)$4, 900 U 
B)$11, 060 U 
C)$14, 700 U 
D)$17, 300 U

Quizplus · Accepted Answer

AH × AR = $140, 500
SR = $123, 200 ÷ 154, 000 hours = $0.80 per hour
Variable overhead rate variance = (AH × AR)- (AH × SR)
= ($140, 500)- (161, 800 hours × $0.80 per hour)
= $140, 500 - $129, 440
= $11, 060 U

(Appendix 11A)The Dillon Corporation Makes and Sells a Single Product